U.S. Dollar Index (DX) Futures Technical Analysis – Upside Momentum Will Continue to Build Over 99.870

The U.S. Dollar rose on Wednesday as investors sought protection in the wake of dire global economic numbers. The greenback advanced to its highest level in more than a week against a basket of major currencies, helped by a plunge in the Euro to a 3-1/2 week low. The Dollar did lose ground to the Japanese Yen, which rose to a seven-week high.

On Wednesday, June U.S. Dollar Index futures settled at 100.210, up 0.448 or +0.45%.

Manufacturing data in the Euro Zone and the UK painted a bleak picture, undermining the single European currency and sterling. Additionally, U.S. private payrolls data also showed a record of more than 20 million jobs lost in April based on the ADP National Employment Report, but the dollar held its gains.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of a closing price reversal bottom on May 1.

A trade through 98.765 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 100.975.

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 potential support.

On the upside, the long-term 50% level at 101.495 is new resistance.

Daily Swing Chart Technical Forecast

Based on the price action this week, the direction of the June U.S. Dollar Index on Thursday 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 buyers. Holding above a minor 50% level at 99.870 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a retest of the main top at 100.975, followed by another main top at 101.030 and the major 50% level at 101.495.

Bearish Scenario

A sustained move under 99.870 will be the first sign of weakness. The next target is 99.690. If this fails then look for the selling to possibly extend into the major 50% level at 99.245.

Side Notes

Longer-term, the upside bias is expected to continue as long as the index remains over the major retracement zone at 99.245 to 98.130.