U.S. Dollar Index (DX) Futures Technical Analysis – Needs to Hold 99.925 Pivot to Sustain Upside Momentum

The U.S. Dollar is edging higher against a basket of major currencies early Wednesday, as a bounce in crude oil prices failed to calm investor nerves, with this week’s rout and frail fuel demand underlining a grim outlook for the global economy.

The dollar index is currently trading just below a two-week high, while showing little reaction against the commodity currencies whacked by the oil collapse, even as U.S. crude jumped 20%.

At 03:53 GMT, June U.S. Dollar Index futures are trading 100.405, up 0.031 or +0.03%.

The plunge in oil prices has soured appetite for risk and seems to have halted a rebound in stock markets as investors brace for a longer and slower economic recovery.

The greenback has gained half a percent this week on a basket of currencies and stands near multi-week highs against currencies of oil exporters such as Russia, Norway and Canada.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 101.030 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 98.815.

The minor range is 101.030 to 98.815. Its 50% level or pivot is support at 99.925.

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is support. This zone stopped the selling at 98.815 and 98.345 recently.

On the upside, the nearest major target is the long-term 50% level at 101.495.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 100.405, the direction of the June U.S. Dollar Index the rest of the session on Wednesday is likely to be determined by trader reaction to the minor pivot at 99.925.

Bullish Scenario

A sustained move over 99.925 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential surge into the main top at 101.030, followed by the major 50% level at 101.495.

Bearish Scenario

A sustained move under 99.925 will signal the presence of sellers. This could trigger a pullback into the 50% level at 99.245, followed by the main bottom at 98.815.