USD Index: Forex Technical Analysis – Rate hike expectations support USDIDX

December 7, 2017

By IFCMarkets

Rate hike expectations support USDIDX

Healthy economic growth and rate hike expectations support US dollar. Will the USDIDX continue advancing?

The US economic growth accelerated to 3.3% in the Q3 from 3.1% in second quarter. And Senate passed its tax overhaul bill last Saturday. While Senate version of the tax bill differs from the legislation passed by the House of Representatives it is widely expected a final bill will be approved by both the House and Senate that President Donald Trump can sign it into law then. As investors anticipate the tax cut stimulus boost for the economy the Federal Reserve is meeting next week. A third interest rate hike this year is viewed as virtual certainty. Strong economic growth and a rate hike expectation are bullish for the dollar index.


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On the daily timeframe the USDIDX: D1 has been rising after hitting 10-week low in the end of November.

  • The Parabolic indicator gives a buy signal.
  • The Donchian channel indicates no trend yet: it is flat.
  • The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
  • The Stochastic oscillator is rising but has not reached the overbought zone yet.

We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 93.643. A price above this level can be used as an entry point for a pending order to buy. The stop loss can be placed below the fractal low at 92.588. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (92.588) without reaching the order, we recommend canceling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position Buy
Buy stop Above 93.643
Stop loss Below 92.588

Market Analysis provided by IFCMarkets