U.S. Dollar Index (DX) Futures Technical Analysis – Trade Through 92.790 Minor Top Shifts Momentum to Upside
The U.S. Dollar rose against a basket of major currencies on Tuesday, moving further away from a near-one month low hit last Friday. The catalyst behind the strength was rising U.S. Treasury yields. The move prompted bearish investors to cut short dollar positions against the Euro a few days before the European Central Bank meets on Thursday.
On Tuesday, September U.S. Dollar Index futures settled at 92.514, up 0.481 or +0.52%.
“It does appear that after the sell-off the dollar has maybe established a short-term base at least,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
“The Federal Reserve we think is still likely to move towards tapering by the end of this year, the U.S. economy is likely to perform relatively strongly, so our view is minor dollar dips, minor dollar weakness is probably a buying opportunity,” he said.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 91.800 will signal a resumption of the downtrend. A move through 93.195 will change the main trend to up.
The minor trend is also down. A trade through 92.790 will change the minor trend to up. This will also shift momentum to the upside.
The new minor range is 91.800 to 92.575. Its 50% level or pivot is 92.190.
The second minor range is 93.195 to 91.800. Its retracement zone at 92.500 to 92.660 is potential resistance.
The short-term range is 93.750 to 91.800. If the minor trend changes to up then its retracement zone at 92.775 to 93.005 will become the next upside target.
Daily Swing Chart Technical Forecast
The direction of the September U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 92.500.
A sustained move over 92.500 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets lined up at 92.660, 92.775 and 92.790.
The index could surge to the upside if 92.790 is taken out with strong volume. This could trigger a move into 93.005.
A sustained move under 92.500 will signal the presence of sellers. If this move creates enough downside momentum then look for a sharp break into the pivot at 92.188. Look for aggressive counter-trend buyers on a pullback into this level. If it fails, we could see a further break into the minor bottom at 91.800.