U.S. Dollar Index (DX) Futures Technical Analysis – Strong Momentum Makes 91.935 – 92.200 Today’s Target

The U.S. Dollar is trading higher against a basket of major currencies on Friday as an overnight spike in 10-year U.S. Treasury yields took risk off the board in global currency markets, especially pressuring the commodity-linked currencies.

Tepid U.S. consumer inflation data helped relieve some of the upside pressure on yields since Wednesday, but the market couldn’t shake the influence of upbeat U.S. weekly initial claims and President Biden’s signing of the $1.9 trillion coronavirus relief package.

At 12:20 GMT, June U.S. Dollar Index futures are trading 91.920, up 0.505 or +0.55%.

Investors feel that both moves could heat up the economy and force the Fed to tighten monetary policy sooner-than-expected. This concern is driving yields higher, while making the U.S. Dollar a more attractive asset.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on March 9.

A trade through 92.530 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 89.655.

The minor trend is also up. A trade through 90.620 will change the minor trend to down. This will confirm the shift in momentum.

The first minor range is 90.620 to 92.530. Its 50% level at 91.350 is the first support. It stopped the selling on Thursday.

The short-term range is 89.655 to 92.530. Its retracement zone at 91.090 to 90.750 is additional support.

On the upside, the first short-term range is 94.085 to 89.155. Its retracement zone at 91.620 to 92.200 is currently being tested.

The second short-term range is 94.585 to 89.155. Its retracement zone at 91.870 to 92.510 stopped the selling on March 9 at 92.530.

Daily Swing Chart Technical forecast

The early price action suggests the direction of the June U.S. Dollar Index into the close will be determined by trader reaction to 91.870.

Bullish Scenario

A sustained move over 91.870 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into 92.200, followed by 92.510 and 92.530.

Bearish Scenario

A sustained move under 91.870 will signal the presence of sellers. This could trigger a pullback into 91.620 and 91.530. If the latter fails then look for the selling to possibly extend into 91.095 to 90.755.

For a look at all of today’s economic events, check out our economic calendar.