U.S. Dollar Index (DX) Futures Technical Analysis – Heavy Selling Pressure Took Out Four-Month Low

The U.S. Dollar is trading at more than a four-month low against a basket of major currencies at the mid-session on Thursday, as investors continued to sell the greenback on expectations the U.S. economy will likely underperform its peers in the developed world with the surge in new coronavirus cases.

At 16:23 GMT, September U.S. Dollar Index futures are trading 94.595, down 0.335 or -0.35%.

The dollar was primarily pressured by a surge in the Euro, which took the single-currency to its highest level since October 16, 2018. The greenback also lost ground to the British Pound and Canadian Dollars. The safe-haven Swiss Franc and Japanese Yen were trading higher.

Traders said a rise in U.S. jobless claims during the latest week, the first in four months, also added to the dollar’s woes, as a persistent increase in COVID-19 cases has derailed the labor market and dampened consumer demand.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed when sellers drove the index through the March 9 main bottom at 94.670.

The main trend changes to up on a trade through 97.810.

The minor trend changes to up if buyers can take out 96.380.

Needless to say, a change in the minor and main trends is not likely. However, due to a prolonged move down in terms of price and time, traders should start watching for a closing price reversal bottom.

This chart pattern won’t change the main trend to up, but it will allow you to cover shorts at a better price than waiting for a trade through a minor or main top.

Recovering the former bottom at 94.670 into the close will indicate the selling pressure is getting weaker. However, if it continues then look for the selling to possibly extend into the next main bottom at 94.500, followed by 94.330.