U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to Pivot at 93.230 Sets the Tone Today

The U.S. is trading slightly lower against a basket of major currencies on Friday as investors await the release of a slew of U.S. economic reports including Retail Sales and Core Retail Sales. Helping to underpin the greenback is a spike in U.S. bond yields, which is making the dollar a more attractive investment and lackluster Chinese economic data, which is driving up its appeal as a safe-haven asset. Meanwhile, perhaps putting a lid on this week’s rally is the COVID-19 aid stalemate in Washington that is expected to extend until at least the U.S. Labor Day holiday in September.

At 09:56 GMT, September U.S. Dollar Index futures are trading 93.180, down 0.137 or -0.15%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.475 will signal a resumption of the downtrend. The market is in no position to change the main trend to up, but the minor trend can change to up.

The minor trend is also down. A trade through 93.895 will change the minor trend to up. This will also shift momentum to the upside. A move through the next minor top at 93.980 will reaffirm the shift in momentum.

The first minor range is 93.980 to 92.475. Its 50% level at 93.230 is controlling the short-term direction.

The second minor range is 96.380 to 92.475. If the minor trend changes to up then look for a rally into its retracement zone at 94.430 to 94.890.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the September U.S. Dollar Index futures contract is likely to be determined by trader reaction to the pivot at 93.230.

Bullish Scenario

A sustained move over 93.230 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to take a run at the minor tops at 93.895 and 93.980.

Taking out these levels could lead to a test of the minor retracement zone at 94.430 to 94.890, but the rally could stall inside this zone because sellers are likely to show up in defense of the main trend.

Bearish Scenario

A sustained move under 93.230 will signal the presence of sellers. This could lead to a retest of the minor bottom at 92.905. Taking out this level could trigger an acceleration into the main bottom at 92.475.