U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 99.69 Sets the Tone on Friday

The U.S. Dollar is trading higher against a basket of major currencies on Friday, extending yesterday’s gains, after U.S.-China tensions boosted demand for safe-haven currencies.

U.S.-China relations have been strained during the coronavirus pandemic. The U.S. has ramped up its criticism of China, blaming it for the spread of the virus, which originated in Wuhan.

At 09:32 GMT, June U.S. Dollar Index futures are trading 99.830, up 0.427 or +0.43%.

Last week, the U.S. government moved to block global chip supplies to blacklisted telecoms equipment maker Huawei Technologies. This week, the U.S. Senate also passed legislation that could prevent some Chinese companies from listing their shares on U.S. exchanges.

On Friday, renewed tensions between the U.S. and China following a new national security law in Hong Kong dented investor sentiment, sending investors into the safety of the U.S. Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 99.005 will signal a resumption of the downtrend. The main trend will change to up on a trade through 100.605.

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is major support.

The short-term range is 98.345 to 101.030. Its 50% level at 99.690 is likely to act like a pivot today.

On the upside, the longer-term 50% level comes in at 101.495.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 99.830, the direction of the June U.S. Dollar Index the rest of the session on Friday is likely to be determined by trader reaction to the short-term 50% level at 99.690.

Bullish Scenario

A sustained move over 99.690 will indicate the presence of aggressive counter-trend buyers. Investor sentiment is likely to drive the price action. There is minor resistance at 99.994. Overcoming this level will put the index in a position to challenge the main top at 100.605.

Bearish Scenario

A sustained move under 99.690 will signal the presence of sellers. This could trigger a quick break into the main 50% level at 99.245. If this fails to hold then look for the selling to possibly extend into the minor bottom at 99.005.