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James Hyerczyk
USD/JPY

The U.S. Dollar rose against a basket of major currencies on Monday, helped by a rise in Treasury yields, as investors weighed attempts to reopen economies against fears of an increase in coronavirus cases that could lead to future lockdowns.

The yield on the benchmark 10-year Treasury note rose 4 basis points to about 0.720% and the yield on the 30-year Treasury bond was also higher at 1.424%.

Investors were more optimistic about the economy on Monday as states across the U.S. and countries around the world have begun easing lockdown measures implemented to contain the coronavirus pandemic, which has ravaged the global economy.

At the same time, the dollar was also supported by safe-haven buying as some investors worried that the economic recovery might be slower than hoped and sought the safety of the U.S. currency even though more countries eased coronavirus lockdowns. Traders also adjusted their dollar positions with an eye on warnings of a second wave of COVID-19 infections.

On Monday, June U.S. Dollar Index futures settled at 100.225, up 0.456 or +0.46%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 98.765 on May 1.

The main trend will change to up on a trade through the last main top at 100.975. A move through 98.765 will signal a resumption of the downtrend.

The minor trend is also down according to the minor swing chart. A trade through 100.455 will change the minor trend to up. This will confirm the shift in momentum to the upside. A trade through the minor bottom at 99.460 will signal the return of sellers.

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

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is major support. This zone is controlling the near-term direction of the index.

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Short-Term Outlook

Based on Monday’s price action, the direction of the June U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to the short-term 50% level at 99.690.

Bullish Scenario

A sustained move over 99.690 will indicate the presence of buyers. This could create the upside momentum needed to take out the minor top at 100.455. This could trigger a rally into main tops at 100.975 and 101.030, followed by the major 50% level at 101.495.

Bearish Scenario

A sustained move under 99.690 will signal the presence of sellers. This could trigger a labored break into the minor bottom at 99.460 and the main 50% level at 99.245. This is followed by the main bottom at 98.765.

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