U.S. Dollar Index (DX) Futures Technical Analysis – Trade Through 103.295 Shifts Momentum Down

The U.S. Dollar is inching higher against a basket of major currencies on Tuesday after failing to follow-through to the downside following Monday’s potentially bearish closing price reversal top. The early inside move suggests investor indecision and impending volatility.

Weakness in the Euro and the British Pound are helping to underpin the dollar. Nonetheless, gains are being capped by a dip in U.S. Treasury yields.

At 10:21 GMT, June U.S. Dollar Index futures are trading 103.820, up 0.131 or +0.13%. On Monday, the Invesco DB US Dollar Index Bullish Fund settled at $27.73, up $0.02 or +0.07%.

The dollar index touched a 20-year high the previous session but the buying quickly died on rumors of potential interventions from several central banks. The index turned lower for the session after Atlanta Fed President Raphael Bostic dampened talk of a 75-basis point rate hike at the Fed’s June meeting.

After a promising start, the Euro turned lower on concerns over a slowdown in the Euro Zone economy due to the war in Ukraine that could lead to a delay in its anticipated first rate hike. The British Pound continued to struggle after Bank of England officials said last week that the economy could face recession later this year.

Volume is a little on the light side as investors position themselves ahead of Wednesday’s major Consumer Price Inflation (CPI) report. However, Fed speakers could create some volatility throughout the session.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 102.375 will change the main trend to down.

On Monday, the June U.S. Dollar Index formed a closing price reversal top. A trade through 103.420 will confirm the chart pattern. This will shift momentum to the downside. A move through 104.210 will negate the chart pattern and trigger a resumption of the uptrend.

The minor range is 102.375 to 104.210. Its 50% level at 103.295 is the first downside target.

The short-term range is 99.810 to 104.210. If the main trend changes to down then look for a test of its pivot at 102.010.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to 103.815.

Bullish Scenario

A sustained move over 103.815 will indicate the presence of buyers. The first upside target is 104.210. Taking out this level will reaffirm the uptrend with no target in place at this time. However, the nearest resistance is the December 2, 2002 main top at 107.310.

Bearish Scenario

A sustained move under 103.815 will signal the presence of sellers. Taking out 103.420 will shift momentum to the downside. This could lead to a quick test of the pivot at 103.295.

A trade through 103.295 could trigger an acceleration to the downside with the next target the main bottom at 102.375, followed by a 50% level at 102.010.