U.S. Dollar Index Futures (DX) Technical Analysis – Closing in Position to Challenge Contract High at 98.700

The U.S. Dollar rallied against a basket of currencies on Friday, helped by a weaker Euro and bullish U.S. housing data that eased concerns over a recession.

The Euro was pressured by growing expectations of an interest rate cut by the European Central Bank after Governing Council member Olli Rehn suggested on Thursday that the central bank could restart its quantitative easing program and was open to extending it into equity purchases.

The dollar was underpinned by a jump in housing permits that more than offset a drop in U.S. homebuilding for a third straight month. On Thursday, the greenback was boosted by better-than-expected U.S. retail sales.

At 20:33 GMT, September U.S. Dollar Index futures are trading 98.055, up 0.050 or +0.05%.

 

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.700 will signal a resumption of the uptrend. A move through 96.980 will change the main trend to down.

The short-term range is 98.700 to 96.980. Its retracement zone at 97.840 to 98.045 is controlling the short-term direction of the market. The index is currently trading on the strong side of this zone. This makes it support.

The intermediate range is 96.320 to 98.700. Its retracement zone at 97.510 to 97.230 is support.

The main range is 95.365 to 98.700. Its retracement zone at 97.030 to 96.640 is controlling the near-term direction of the index. This zone also stopped the selling at 96.980 on August 6.

Daily Technical Forecast

Into the close, holding above the short-term Fibonacci level at 98.045 will indicate buyers are coming in to defend the trend. The first upside target is a downtrending Gann angle at 98.360, followed by a second downtrending Gann angle at 98.530. This is the last potential resistance angle before the 98.700 main top.

A failure to hold 98.045 will indicate the selling is getting stronger into the close. Crossing to the weak side of a downtrending Gann angle at 98.015 could drive the index into the short-term 50% level at 97.840, followed by a pair of uptrending Gann angles at 97.740 and 97.635.