U.S. Dollar Index (DX) Futures Technical Analysis – Major Downside Target is 99.245 – 98.130 Retracement Zone

The U.S. Dollar is under pressure for a second straight session as investors continued to defy a broader sense of doom surrounding the release of Friday’s U.S. non-farm payrolls report and found reasons to throw money at riskier currencies with more governments slowly reopening their economies for business. The selling pressure began on Thursday when U.S. Treasury yields fell after U.S. money markets priced in a small chance of negative interest rates next year.

At 03:37 GMT, June U.S. Dollar Index futures are trading 99.695, down 0.211 or -0.21%.

The dollar’s retreat against riskier currencies reflected a recovery in risk sentiment as global shares rallied, with the NASDAQ Index moving to the plus side for the year.

Furthermore, on top of aggressive monetary easing around the world, hopes of economic normalization are supporting the mood as some countries in Europe and parts of the United States ease restrictions on economic activity.

Finally, the greenback was also caught off guard as U.S. short-term bond yields hit a record low with markets starting to price in negative U.S. interest rates for the first time.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The short-term shift in momentum to the upside ended on Thursday with the formation of a closing price reversal top and its subsequent confirmation on Friday.

A trade through 100.455 will negate the closing price reversal top, while a move through 100.975 will change the main trend to up. A move through 98.765 will signal a resumption of the downtrend.

The short-term range is 98.345 to 101.030. Its 50% level at 99.690 is currently being straddled.

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is the next downside target. This zone has stopped the selling at 98.345, 98.815 and 98.765. It is controlling the longer-term direction of the dollar index.

Daily Swing Chart Technical Forecast

Based on Thursday’s closing price reversal top and the current price at 99.965, the direction of the June U.S. Dollar Index the rest of the session on Friday is likely to be determined by trader reaction to the short-term 50% level at 99.690.

Bearish Scenario

A sustained move under 99.690 will indicate the presence of sellers. The first downside target is the main 50% level at 99.245. If this fails then look for the selling to possibly extend into the main bottom at 98.765, followed by the main Fibonacci level at 98.130.

Bullish Scenario

A sustained move over 99.690 will signal the return of buyers, or that the selling pressure is weakening. This could lead to a quick rally into a pivot at 100.055, followed by 100.455.