U.S. Dollar Index Futures (DX) Technical Analysis – Closing Price Reversal Top Confirmed

Watch the Euro for direction since it represents about 57% of the index. A weaker Euro could trigger a turnaround in the index. A stronger Euro will likely mean further downside pressure on the dollar index. Today’s U.S. Durable goods report and the European Parliamentary Elections could be the catalysts behind heightened volatility. Dollar bulls don’t want to see a weak durable goods report.
James Hyerczyk
U.S. Dollar Index

The U.S. Dollar retreated from a two-year high against a basket of currencies on Thursday, forming a potentially bearish closing price reversal top in the process. Most of the move was fueled by a wicked closing price reversal bottom in the Euro.

The sell-off in the U.S. Dollar was caused by a report that showed U.S. manufacturer growth hit a multiyear low in May, the latest sign that the trade war may be slowing the economy. The news drove down U.S. Treasury yields, which made the U.S. Dollar a less-attractive investment.

With U.S.-China trade relations deteriorating, conditions could worsen for the U.S. economy. This could lead to further pressure on the U.S. Dollar as Forex investors would be forced to make adjustments to account for a possible interest rate cut by the U.S. Federal Reserve.

At 06:50 GMT, June U.S. Dollar Index futures are trading 97.620, down 0.103 or -0.11%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the closing price reversal top on Thursday and the subsequent confirmation earlier today.

The chart pattern does not mean the trend is changing to down, but it could lead to a 2 to 3 day correction.

A trade through 98.260 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 96.810 will change the main trend to down.

The short-term range is 96.810 to 98.260. The first downside target is its retracement zone at 97.535 to 97.365. Since the main trend is up, look for buyers to show up on the first test of this zone. Look for an even steeper break if 97.365 fails as support.

The main range is 95.170 to 98.260. If the main trend changes to down then look for the selling to continue into its retracement zone at 96.715 to 96.350.

Daily Swing Chart Technical Forecast

With the confirmation of the closing price reversal top, we’re looking for the selling to continue into the short-term 50% level at 97.535. We could see a technical bounce on the first test of this level.

If 97.535 fails then look for the selling to possibly extend into the short-term Fibonacci level at 97.364. Buyers could also show up on a test of this level.

If 97.364 fails then look for the selling pressure to increase. This could lead to an acceleration to the downside with the main bottom at 96.810 and the main Fibonacci level at 96.715, the next downside targets.

Overview

Watch the Euro for direction since it represents about 57% of the index. A weaker Euro could trigger a turnaround in the index. A stronger Euro will likely mean further downside pressure on the dollar index.

Today’s U.S. Durable goods report and the European Parliamentary Elections could be the catalysts behind heightened volatility. Dollar bulls don’t want to see a weak durable goods report.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US