U.S. Dollar Index (DX) Futures Technical Analysis – As Liquidity Issues Ease, Headed to 99.245 – 98.130

The U.S. Dollar is easing against a basket of currencies for a third straight session as investors continue to lighten up on positions in the greenback, a couple of days after the Federal Reserve rolled out unprecedented measures aimed at boosting liquidity and bolstering investor confidence in the face of the spreading coronavirus pandemic.

At 06:45 GMT, June U.S. Dollar Index futures are trading 101.515, down 0.732 or -0.72%.

On Tuesday, equity markets rose along with gold prices and Treasury yields and the U.S. Dollar edged lower against a basket of currencies, as investor concerns over liquidity eased, at least for the moment.

Tuesday’s moves were a potential sign that investors were giving at least a tentative stamp of approval to the Fed’s unprecedented interventions of the last week and the $2 trillion in fiscal stimulus from the government.

Daily Technical Analysis

The trend is up according to the daily swing chart. However, momentum has been trending lower since Monday’s higher-high, lower-close chart pattern.

A trade through 103.960 will signal a resumption of the uptrend. The main trend will change to down on a move through 94.530. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of the last rally.

The market is currently testing the lower or 50% level of a long-term retracement zone at 101.495. This is major support. If it fails, prices could plunge about 2.250 points.

The short-term range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is the primary downside target. Since the main trend is up, buyers are likely to show up on a test of this area.

Daily Technical Forecast

Based on the early price action and the current price at 101.515, the direction of the June U.S. Dollar Index the rest of the session on Wednesday is likely to be determined by trader reaction to the major 50% level at 101.495.

Bullish Scenario

A sustained move over 101.495 will indicate the presence of buyers. Overtaking the steep downtrending Gann angle at 101.960 will indicate the buying is getting stronger. This could lead to a series of additional downtrending Gann angles at 102.960, 103.460 and 103.710. The latter is the last potential resistance angle before the 103.960 main top.

Bearish Scenario

A sustained move under 101.495 will signal the presence of sellers. The first downside target is the uptrending Gann angle at 100.530.

This Gann angle is the last potential support before the short-term retracement zone at 99.245 to 98.130.