U.S. Dollar Index Futures (DX) Technical Analysis – July 30, 2019 Forecast

The U.S. Dollar is inching higher against a basket of currencies early Tuesday. The greenback is being helped by another steep plunge in the British Pound and some slight weakness in the Canadian Dollar. However, gains are being limited by a steady Euro and a stronger Japanese Yen. Volume is relatively light ahead of a slew of U.S. economic reports today and Wednesday’s Federal Reserve announcements.

At 08:18 GMT, the September U.S. Dollar Index futures contract is trading 97.875, up 0.090 or +0.09%.

The Fed is widely expected to cut its benchmark interest rate 25-basis points. However, investors will be watching the guidance from Fed Chief Jerome Powell to determine how aggressive the central bank will be in the future.

The Sterling is getting whacked for a second day amid growing speculation that Britain is headed for a messy no-deal Brexit from the European Union. Low volume and sideways trading in the Euro means traders are just making a market since no one wants to get ahead of the Fed.

The Japanese Yen picked up a bid after the Bank of Japan left interest rates unchanged and said it was not likely to change policy until spring 2020. This was a little hawkish for traders. The BOJ also added that it would ramp up stimulus “without hesitation” if needed.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out yesterday’s high at 97.905.

The market is in no danger of changing the main trend to down, but it is up eight sessions from the last main bottom, which puts it inside the window of time for a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day counter-trend break.

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 Tuesday is likely to be determined by trader reaction to yesterday’s close at 97.785.

Bullish Scenario

A sustained move over 97.785 will indicate the presence of buyers. Taking out today’s intraday high at 97.960 will indicate the buying is getting stronger. The nearest potential upside targets are Gann angles at 98.320 and 99.090.

Bearish Scenario

A sustained move under 97.785 will signal the presence of sellers. The daily chart is wide open to the downside with the next targets coming in at 97.320 and 97.220. There is going to have to be some bearish news to drive prices into these levels.