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James Hyerczyk
U.S. Dollar Index

The U.S. Dollar fell to its lowest level since March 26 against a basket of major currencies on Friday on bets the Federal Reserve would start lowering interest rates at its July 31 meeting. Most of the selling was fueled by a surge in the Euro, which was supported by stronger-than-expected French and German business activity in June.

The Japanese Yen rose to a five-month high against the U.S. Dollar on safe-haven buying as tension between the United States and Iran increased. However, the yen gave back some of those gains late as tensions eased and U.S. Treasury yields firmed.

In economic news, the dollar was underpinned by the news of stronger-than-forecast sales in U.S. existing homes in May. This news offset weaker-than-expected U.S. manufacturing growth.

On Friday, September U.S. Dollar Index futures settled at 95.718, down 0.420 or -0.44%.

Daily Sept U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Friday when sellers took out the previous main bottom at 95.890. The new main top is 97.265. The next major downside target is the March 20 main bottom at 94.696.

The main range is 94.696 to 97.715. Its retracement zone at 95.849 to 96.206 is controlling the near-term direction of the index. Closing below this area supports the developing downside bias. The zone is now resistance.

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Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at 95.718, the direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to the main Fibonacci level at 95.849.

Bearish Scenario

A sustained move under 95.849 will indicate the presence of sellers. This could trigger an acceleration to the downside since the next major target is the March 20 main bottom at 94.696.

Bullish Scenario

Overtaking and sustaining a move over 95.849 will signal the return of buyers. If this move is strong enough to generate enough short-covering pressure then look for a potential rally into the main 50% level at 96.206. Taking out this level will be a sign of strength.

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