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James Hyerczyk
U.S. Dollar Index

The U.S. Dollar is trading slightly higher against a basket of currencies on Monday. Most major currencies are trading lower against the greenback, but the British Pound is the worst performer.

The Sterling fell to a 28-month low as a no-deal Brexit seems increasingly likely under new British Prime Minister Boris Johnson. According to CNBC, “Senior ministers said on Sunday the British government is working on the assumption that the European Union will not renegotiate its Brexit deal and is ramping up preparations to leave the bloc on October 31 without an agreement.”

Last week, the European Central Bank signaled that it is likely to cut interest rates deeper into negative and adopt more easing measures in September to shore up the sagging Euro Zone economy. On Wednesday, the U.S. Federal Reserve is widely expected to cut interest rates for the first time in more than a decade. However, a 25-basis point rate cut has been priced into the market for weeks. Investors want to know what the Fed is going to do in September and December.

There are no major U.S. economic releases today.

At 09:10 GMT, September U.S. Dollar Index futures are trading 97.795, up 0.080 or +0.08%.

Daily September U.S. Dollar Index

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the contract high at 97.715. There is no visible resistance at this time.

The main trend will change to down on a trade through 96.320. This is highly unlikely, however, the index is up seven sessions since its last main bottom so it begins today’s session inside the window of time for a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 97.220 will change the minor trend to down. This will also shift momentum to the downside.


Daily Technical Forecast

Based on the early price action, the direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to Friday’s close at 97.715.

Bullish Scenario

A sustained move over 97.715 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into the steep uptrending Gann angle at 98.070. Overtaking this angle will indicate the buying is getting stronger. This could trigger a further rally into the next uptrending Gann angle at 98.365. Crossing to the strong side of this angle will put the index in an extremely bullish position.

Bearish Scenario

A sustained move under 97.715 will signal the presence of sellers. This will also put the index in a position to post a potentially bearish closing price reversal top. If confirmed, this chart pattern could trigger the start of a 2 to 3 day counter-trend correction, but not necessarily change the trend to down.

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