U.S. Dollar Index (DX) Futures Technical Analysis – Trend Changes to Down on Trade Through 91.340

The U.S. Dollar broke sharply against a basket of major currencies late Wednesday after the Federal Reserve repeated its pledge to keep its target interest rate near zero for years to come.

The Fed took the wind of the sail of the U.S. Dollar when it sounded more optimistic than some traders expected by raising their outlook for both economic growth and the labor market.

At 20:33 GMT, June U.S. Dollar Index futures are trading 91.390, down 0.490 or -0.53%.

The greenback weakened against a group of peers after the highly anticipated statement from the Fed projected a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down.

The benchmark 10-year Treasury note, which touched 1.689%, its highest level since January 2020, earlier in the session, last fell 11/32 in price to yield 1.6603%, from 1.623% late on Tuesday.

Daily Swing Chart Technical Analysis

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

The main trend will change to down on a trade through 91.340. A trade though 92.530 will signal a resumption of the uptrend.

If 91.340 is taken out then 92.045 will become the new main top and potential change in trend level.

On the upside, potential resistance levels are lined up at 91.620, 91.870 and 92.200.

On the downside, the first target is 91.350. This is followed by a short-term retracement zone at 91.095 to 90.755.

Daily Swing Chart Technical Forecast

Based on the late session trade, the direction of the June U.S. Dollar Index early Thursday will be determined by trader reaction to the minor Fibonacci level at 91.350.

Bearish Scenario

Crossing to the weak side of the Fib level at 91.350 will indicate the presence of sellers. This move should easily take out the main bottom at 91.340, changing the main trend to down. If this trigger enough downside momentum then look for the selling to possibly extend into the short-term retracement zone at 91.095 to 90.755.

Bullish Scenario

A sustained move over 91.350 will indicate the presence of buyers. They will be trying to defend the uptrend. If the move creates enough upside momentum then look for a possible rally into a pair of 50% levels at 91.620 and 91.870.