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U.S. Dollar Index (DX) Futures Technical Analysis – Testing Major Retracement Zone at 99.245 – 98.130

By:
James Hyerczyk
Published: May 26, 2020, 15:46 UTC

The direction of the June U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to 99.245.

USD/JPY

The U.S. Dollar is trading lower against all major currencies on Tuesday as growing optimism about a global recovery from the COVID-19 pandemic supported riskier currencies. The news also dampened the greenback’s appeal as a safe-haven currency.

The Euro rose against the U.S. Dollar as the mood among German exporters recovered somewhat in May after a “catastrophic” April, the first full month of coronavirus lockdown measures in Europe’s largest economy, the Ifo Institute said on Tuesday.

The British Pound moved higher on Tuesday, going above 1.2300 for the first time in 13 days, boosted mainly by improving global risk appetite which saw the dollar fall. Prime Minister Boris Johnson set out plans on Monday to ease Britain’s coronavirus lockdown, including restrictions on retail, if government tests are met.

The Sterling has been weighed down by Britain’s high COVID-19 death rate, the fact that the Bank of England is considering negative interest rates, and Brexit-related risks.

The commodity-linked Canadian Dollar strengthened to a two-month high against its U.S. counterpart on Tuesday as steps to reopen the world economy boosted investor sentiment. The price of oil, one of Canada’s major exports, was supported by growing confidence that producers are following through on commitments to cut supplies and rising fuel demand as coronavirus lockdowns ease.

At 15:22 GMT, June U.S. Dollar Index futures are trading 98.995, down 0.893 or -0.89%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the last swing bottom at 99.005. A trade through 99.995 will change the main trend to up.

The main range is 94.530 to 103.960. The index is currently testing its retracement zone at 99.245 to 98.130. This zone is controlling the longer-term direction of the index.

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

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 98.995, the direction of the June U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to the main 50% level at 99.245.

Bearish Scenario

A sustained move under 99.245 will indicate the presence of sellers. Taking out 99.005 indicates the selling is getting stronger. This could trigger a break into another main bottom at 98.765.

If 98.675 fails then look for the selling to possibly extend into another main bottom at 98.345, followed by the major Fibonacci level at 98.130.

Bullish Scenario

Recapturing and sustaining a rally over 99.245 will indicate the return of buyers. This could lead to a retest of the short-term 50% level at 98.690, followed by the new main top at 99.995.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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