U.S. Dollar Index (DX) Futures Technical Analysis – Trade Through 92.800 Shifts Momentum to Downside

The U.S. Dollar is edging higher against a basket of major currencies late Wednesday in a mostly lackluster trade as investors continue to assess the impact of yesterday’s U.S. consumer inflation report and today’s producer inflation report on Fed policy.

The catalysts behind today’s benign price action are hawkish U.S. weekly initial claims and producer price reports. Both seem to be offsetting yesterday’s dovish U.S. consumer inflation report that eased fears over early tapering of economic support by the Federal Reserve.

At 17:48 GMT, September U.S. Dollar Index futures are trading 92.985, up 0.067 or +0.07%.

U.S. Treasury yields are flat Thursday after initial jobless claims fell from the week prior for the third-straight week, following the release of weekly unemployment and PPI reports.

The number of initial jobless claims filed last week totaled 375,000, in line with estimates from economists surveyed by Dow Jones.

July’s producer price index came in hotter than expected Thursday morning. The index tracks the changes in prices companies get for the goods they produce and acts as a more indirect measure of inflation. Wholesale prices jumped 1%, higher than economists’ estimates and matching June’s increase.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside with the formation of a closing price reversal top on Wednesday.

A trade through 93.205 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 92.800 will confirm the closing price reversal top. This won’t change the main trend to down, but it could trigger the start of a 2 to 3 day correction.

The minor range is 93.205 to 92.800. The index is currently trading on the weak side of its pivot at 93.005.

The nearest support is a pair of retracement levels at 92.495 and 92.325.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index into the close on Thursday will be determined by trader reaction to 93.005.

Bullish Scenario

A sustained move over 93.005 will indicate the presence of buyers. If this move creates enough late session upside momentum then look for a possible retest of 93.205.

Bearish Scenario

A sustained move under 39.005 will signal the presence of sellers. The first downside target is 92.800. Taking out this level could trigger an acceleration to the downside with 92.495 the next likely downside target.