U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 96.995 to 97.190 Sets Near-Term Tone

The U.S. Dollar is climbing against a basket of major currencies on Friday, following yesterday’s potentially bullish closing price reversal bottom. The chart pattern was confirmed earlier today when buyers took out yesterday’s high. If the move can create enough upside momentum then look for a 2 to 3 day rally equal to 50% to 61.8% of the last break.

At 06:47 GMT, September U.S. Dollar Index futures are trading 96.925, up 0.252 or +0.26%.

The dollar was well-bid against risky currencies after a surge in new coronavirus cases in the United States further undermined the case for a quick economic recovery.

Traders also said the dollar rally on Thursday coincided with the Supreme Court ruling that a New York prosecutor can obtain President Trump’s financial records. But it did prevent, at least for now, the Democratic-led House of Representatives from obtaining the same records.

Most of today’s gains are being attributed to a weaker Euro, while gains are likely being limited by a stronger Japanese Yen.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has shifted to the upside with the formation and confirmation of a closing price reversal bottom.

A trade through 96.180 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through 97.810.

The short-term range is 95.57 to 97.81. Its 50% level at 96.69 is new support.

The minor range is 97.810 to 96.180. Its retracement zone at 96.995 to 97.187 is potential resistance.

The intermediate 50% target is 97.730.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 96.925, the direction of the September U.S. Dollar Index the rest of the session on Friday is likely to be determined by trader reaction to the 50% level at 96.690.

Bullish Scenario

A sustained move over 96.690 will indicate the presence of buyers. If this creates enough upside momentum then look for the buying to extend into 96.995 to 97.190.

Since the main trend is down, look for sellers on the first test of 96.995 to 97.190. Overcoming 97.190, however, could trigger an acceleration to the upside with the next target a resistance cluster at 97.73 to 97.810.

Bearish Scenario

The inability to overcome 96.995 to 97.107 will be the first sign of weakness. A failure to hold 96.690 will indicate the selling pressure is getting stronger. This could lead to a test of a minor pivot at 96.560, followed by 96.180.

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