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James Hyerczyk
US Dollar DXY

June U.S. Dollar Index futures are trading higher on Wednesday with the rally being driven by a weaker Euro, which makes up about 57 percent of the index. Traders are ignoring the plunge in U.S. Treasury yields which tends to weaken demand for the greenback. This, along with lower demand for higher-risk assets, suggests that some of the dollar’s strength may be related to safe-haven buying. Dollar buyers are also shrugging off weaker-than-expected U.S. retail sales data.

At 14:13 GMT, June U.S. Dollar Index futures are trading 97.480, up 0.158 or +0.16%.

The escalating dispute between Washington and Beijing may be pressuring the Euro because of concerns over global growth. This is helping to boost the U.S. Dollar Index. Euro traders are also ignoring stronger-than-expected data from Germany.

Weak Chinese data is helping to drive U.S. Treasury yields lower because the information confirms that the trade war is hurting China’s economy. This is raising concerns over slowing global economic conditions. The move in yields also likely means that investors are pricing in the possibility of a U.S. recession.

In the U.S., retail sales, capacity utilization and industrial production all came in under their forecasts. This also suggests a weakening U.S. economy. However, the data isn’t having much of an influence on dollar. This supports the notion that the weaker Euro and safe-haven buyers are behind the June U.S. Dollar’s strength.

Daily June U.S. Dollar Index

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 97.865 will change the main trend to up. A move through 96.810 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 97.510 will change the minor trend to up. This will also shift momentum to the upside.

The intermediate range is 96.365 to 98.085. Its retracement zone at 97.225 to 97.022 is support.

The short-term range is 98.085 to 96.810. Its retracement zone at 97.448 to 97.598 is resistance. This zone is currently being tested.


Daily Technical Forecast

Based on the current price at 97.470, the direction of the June U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the short-term 50% level at 97.448.

Bullish Scenario

A sustained move over 97.448 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to extend into 97.598 and 97.679. Overtaking the latter could drive the index into 97.882. This is the last potential resistance before the main top at 98.085.

Bearish Scenario

A sustained move under 97.448 will signal the presence of sellers. This could drive the index into support at 97.225. This is the trigger point for an acceleration into 97.022.

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