U.S. Dollar Index (DX) Futures Technical Analysis – Weaker as Investors Turn Less Averse to Risk

The U.S. Dollar is trading lower against a basket of major currencies on Monday as traders turned more positive and less averse to risk amid an easing in coronavirus lockdown restrictions in several countries.

The greenback was weaker against the Japanese Yen and the Euro as investors turned slightly more positive on Italy and saw the Bank of Japan (BOJ) continuing to support an economy battered by the pandemic.

At 09:36 GMT, June U.S. Dollar Index futures are trading 99.985, down 0.449 or -0.45%.

The BOJ expanded its stimulus to help companies hit by the coronavirus crisis, pledging to buy unlimited amount of bonds to keep borrowing costs low as the government tries to spend its way out of the deepening economic pain.

Traders now shift their focus to a U.S. Federal Reserve meeting starting on Tuesday with the results released Wednesday at 18:00 GMT. The Fed has already announced a raft of measures and is expected to stay on hold this week, which is unlikely to trouble the dollar, analysts said.

The European Central Bank (ECB) meeting on Thursday could move the dollar index because the ECB is likely to extend its debt purchases to include junk bonds, and some investors are worried this decision could widen rifts between members of the European Union.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside. A trade through 101.030 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 98.815.

The minor trend is down. It changed to down earlier today when sellers took out the minor bottom at 99.990. This move shifted momentum to the downside.

Also helping to change the momentum is the confirmation of Friday’s closing price reversal top.

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

The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is a potential support area. It helped put in bottoms recently at 98.345 and 98.815.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 99.985, the direction of the June U.S. Dollar Index the rest of the session on Monday is likely to be determined by trader reaction to the former bottom at 99.990.

Bearish Scenario

A sustained move under 99.990 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the main 50% level at 99.245, followed closely by main bottoms at 98.815 and 98.345, and the short-term Fibonacci level at 98.345.

Bullish Scenario

Overtaking and sustaining a rally over 99.990 will indicate the selling pressures has lighted up. This could lead to a rally into the intraday pivot at 100.420, then 100.975.

Taking out 100.975 will negate the closing price reversal top. This could lead to a further rally into the main top at 101.030 and the long-term 50% level At 101.495.