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James Hyerczyk
U.S. Dollar

The U.S. Dollar finished lower against a basket of currencies of Friday after failing to follow-through to the upside following the formation of a potentially bullish closing price reversal bottom earlier in the week. A sideways-to-slightly higher Euro helped keep a lid on the index as well as a recovering by the Japanese Yen.

On Friday, September U.S. Dollar Index futures settled at 95.725, down 0.015 or -0.02%.

The U.S. Dollar could get a boost on Monday after U.S. President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks over the weekend. Look for the greenback to rally if Treasury yields rise. The news may encourage the Fed to back off from cutting interest rates in late July. Firmer yields will make the U.S. Dollar a more attractive asset.

Daily Sept U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, the closing price reversal bottom at 95.365 on June 25 and the subsequent confirmation of the chart pattern, shifted momentum to the upside.

The main trend will actually change to up on a trade through 97.265. A trade through 95.365 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through 95.920 will change the minor trend to up and shift momentum to the upside.

The major retracement zone at 96.205 to 95.850 is controlling the direction of the index. Holding below this zone will give the index a downside bias. Trading inside the zone will turn the index neutral. Crossing to the strong side of 96.205 will shift the bias to the upside.

The short-term range is 97.265 to 95.365. Its retracement zone at 96.315 to 96.539 is another upside target. Since the main trend is down, sellers may come in on a test of this zone.

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Daily Swing Chart Technical Forecast

Based on Friday’s close at 95.725, 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.

Bullish Scenario

A sustained move over 95.849 will indicate the presence of buyers. Taking out 95.920 will change the minor trend to up. This could trigger a rally into a pair of 50% levels at 96.205 and 96.315.

Bearish Scenario

A sustained move under 95.850 will signal the presence of sellers. The first downside target is 95.560. If this fails to hold then look for the selling to possibly extend into the main bottom at 95.365.

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