U.S. Dollar Index (DX) Futures Technical Analysis – Closing Price Reversal Top Confirmed; More Selling Likely

The U.S. Dollar fell against a basket of major currencies on Wednesday, confirming the previous session’s closing price reversal top. Milder than expected consumer inflation pressured the index early in the session. The selling intensified later in the day after the 10-year Treasury note auction showed adequate demand, driving yields lower.

At 21:36 GMT, March U.S. Dollar Index futures are trading 91.805, down 0.159 or -0.17%.

Lower yields tend to make the U.S. Dollar a less-desirable investment. Given the current downside momentum and the lack of any major U.S. reports until next week’s retail sales data, prices could continue to fall until the Fed makes new monetary announcements on March 17.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower following Tuesday’s closing price reversal top and today’s subsequent confirmation of the potentially bearish chart pattern.

A trade through 92.530 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 89.675.

The minor trend is also up. A trade through 90.635 will change the minor trend to down. This will confirm the shift in momentum.

The index is currently trading inside the main retracement zone at 91.705 to 92.310. This zone is controlling the near-term direction of the index.

The first minor 50% target is 91.585. The second minor 50% target comes in at 91.105.

Short-Term Outlook

We’re looking for an early test of the pair of 50% levels at 91.705 and 91.585. We could see a technical bound on this test.

If 91.585 fails as support then look for an acceleration to the downside with the next target the 50% level at 91.103.