U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 99.690, Weakens Under 99.240

The U.S. Dollar is edging lower against a basket of major currencies early Wednesday as the slowing spread of the coronavirus and moves to re-open economies supported the investor mood, ahead of major central bank meetings. The Fed is expected to release its latest guidance later today at 18:00 GMT and the European Central Bank on Thursday.

At 07:28 GMT, June U.S. Dollar Index futures are trading 99.760, down 0.174 or -0.18%.

U.S. Dollar investors will be watching to see if the Fed gives any clues on its future policy path after it responded to the economic devastation of the COVID-19 pandemic by slashing rates, buying bonds and backstopping credit markets. After the release of its policy statement, Federal Reserve Chairman Jerome Powell will hold a press conference at 18:30 GMT. Because of the two events, traders should prepare for a two-sided move.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. Traders are going to have to take out two main tops at 100.975 and 101.030 to signal a resumption of the uptrend.

The main trend will change to down on a trade through the last main bottom at 98.815. This is followed by another main bottom at 98.345.

The minor trend is down. It changed to down when sellers took out the minor bottom at 99.990. This move shifted momentum to the downside.

The short-term range is 98.345 to 101.030. Its 50% level or pivot at 99.69 is controlling the price action this week.

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is the next major target zone. This area is important support because it stopped selling at 98.345 on March 27 and at 98.815 on April 14.

On the upside, the major resistance is a long-term 50% level at 101.495.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 99.760, the direction of the June U.S. Dollar the rest of the session on Wednesday is likely to be determined by trader reaction to 99.690.

Bullish Scenario

A sustained move over 99.690 will indicate the presence of buyers. The first upside target is 100.230, followed by 100.975.

Bearish Scenario

A sustained move under 99.690 will signal the presence of sellers. This is followed by a 50% level at 99.245. Watch for a technical bounce on the first test of this level. If it fails to hold as support then look for the selling to possibly extend into the main bottom at 98.815.