U.S. Dollar Index (DX) Futures Technical Analysis – Surge into 93.430 or Closing Price Reversal Top?

The U.S. Dollar touched its highest level against a basket of major currencies since July 21 on Tuesday as investors speculated further over whether recent strong jobs data could be enough to push the Federal Reserve to soon start tapering its bond-buying program. The heavily weighted Euro helped sustain the bullish tone throughout the session as it fell to a more than four month low.

At 20:55 GMT, September U.S. Dollar Index futures are trading 93.080, up 0.142 or 0.15%.

Employment data and inflation readings are the key economic indicators being used by the Federal Reserve to determine when it will start tightening monetary policy.

On Wednesday, investors will get the opportunity to react to the latest consumer inflation reading for July. On a month-to-month basis, the Consumer Price Index (CPI) is expected to have risen 0.5%. This would be at a slower pace than the previously reported 0.9% surge. Core CPI is expected to come in at 0.4%, slower than the previously reported 0.9%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending higher since the formation of the closing price reversal bottom on July 30.

A trade through 93.195 will negate a closing price reversal top and signal a change in trend. A move through 91.780 will negate the closing price reversal bottom and signal resumption of the downtrend.

Daily Swing Chart Technical Forecast

Tuesday’s upside momentum could trigger an early rally into the main top at 93.195. Taking out this level will indicate the buying is getting stronger with the March 31 main top at 93.430 the next likely upside target.

On the downside, the nearest potential support level is 92.495.