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James Hyerczyk
U.S. Dollar Index

The U.S. Dollar is trading lower on Tuesday following yesterday’s dramatic reversal to the upside. That move was fueled by positive developments over U.S.-China trade relations. Today’s price action suggests traders are looking for more details as to whether the trade talks between the two economic powerhouses will resume in September.

Over the near-term, market uncertainty around the trade dispute is going to remain at elevated levels, however, even with today’s early weakness, traders remain cautiously optimistic that following Friday’s volatile events, the two parties will soon resume negotiations or perhaps reach a cease fire over a further escalation of tariffs.

At 10:16 GMT, September U.S. Dollar Index futures are trading 97.815, down $0.174 or +0.18%.

Daily September U.S. Dollar Index

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 at 98.455 on August 23.

A trade through 98.455 will negate the closing price reversal bottom and signal a resumption of the uptrend. This could lead to an eventual test of the high for the year at 98.700. The main trend will change to down on a move through 96.980.

The minor trend is down. This confirms the shift in momentum to the downside.

The minor range is 98.455 to 97.370. Its 50% level or pivot at 97.915 is acting like resistance.

The short-term range is 96.320 to 98.700. Its retracement zone at 97.510 to 97.230 is support. This zone stopped the selling at 97.370 on Monday.

The main range is 93.365 to 98.700. Its retracement zone at 97.035 to 96.640 is major support. It is controlling the longer-term direction of the index. It stopped the selling on August 6 at 96.980.


Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 97.815, the direction of the September U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to the pivot at .97.915.

Bearish Scenario

A sustained move under 97.915 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 97.510. This is followed by yesterday’s low at 97.370 and the short-term Fibonacci level at 97.230.

Bullish Scenario

A sustained move over 97.915 will signal the presence of buyers. This move could create the upside momentum needed to challenge last week’s high at 98.455.

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