U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 91.870 Sets Near-Term Tone

The U.S. Dollar is trading nearly flat against a basket of major currencies shortly before the close on Tuesday in quiet trading as investors awaited the outcome of a U.S. Federal Reserve meeting for clues as to the direction of U.S. interest rates. The Fed started its two-day meeting earlier in the day.

At 20:38 GMT, June U.S. Dollar Index futures are trading 91.850, up 0.018 or +0.02%.

Fed policymakers are expected to forecast that the economy will grow in 2021 at its fastest rate in decades with unemployment falling and inflation rising, but they are unlikely to change their monetary policy.

In economic news, traders showed little reaction to data that showed U.S. retail sales dropped by a seasonally adjusted 3.0% last month, due in part to harsh weather in February. Excluding automobiles, gasoline, building materials and food services, retail sales decreased 3.5% last month after surging by an upwardly revised 8.7% in January.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has been trending lower since the formation of the closing price reversal top on March 9.

A trade through 92.530 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 91.340.

On the upside, potential resistance levels come in at 91.870, 92.200 and 92.510.

On the downside, potential support levels come in at 91.620 and 91.350.

The short-term range is 89.655 to 92.530. Its retracement zone at 91.095 to 90.755 is the primary downside target.

Short-Term Outlook

The direction of the June U.S. Dollar Index over the short-term is likely to be determined by trader reaction to the 50% level at 91.870.

Bullish Scenario

A sustained move over 91.870 will indicate the presence of buyers. This could trigger a spike into 92.200, followed by the resistance cluster at 92.510 to 92.530. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 91.870 will signal the presence of sellers. This could trigger a quick break into 91.620, followed by 91.350 to 91.340.

Taking out 91.340 will indicate the selling pressure is getting stronger. This could extend the selling into the short-term retracement zone at 91.095 to 90.755. Buyers could show up on a pullback into this area.