U.S. Dollar Index Futures (DX) Technical Analysis – June 10, 2019 Forecast

The U.S. Dollar is edging higher against a basket of currencies early Monday after a deal between the United States and Mexico late Friday helped dampen concerns over a U.S. economic slowdown. By making the deal tied to immigration issues, the country avoided a 5% tariff on all Mexican imports into the U.S.

Early last week, stocks fell, Treasury yields plunged and the dollar weakened as the news broke about the tariffs. The dollar fell further against a basket of major currencies after a dovish Federal Reserve Chairman Jerome Powell opened the door to a potential interest rate cut.

Also putting pressure on the dollar was a less-dovish European Central Bank and a weaker-than-expected U.S. labor report.

The news of the postponement of the tariffs is helping to generate a slight “risk-on” tone, which is helping to underpin the dollar. The greenback could rally further later in the session if demand for risky assets increases and Treasury traders start to take profits after a spectacular rally. A sell-off in the Treasury market will drive up yields. This should make the dollar a more attractive asset.

At 07:06 GMT, June U.S. Dollar Index futures are trading 96.735, up 0.245 or +0.25%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through last week’s low at 96.405 will signal a resumption of the downtrend. This could trigger a further break into the next main bottom at 96.365. Taking out this level will reaffirm the downtrend. This could trigger an acceleration to the downside.

A trade through 97.390 will change the main trend to up.

The main range is 95.170 to 98.260. The index is currently testing its 50% to 61.8% retracement zone at 96.715 to 96.350. This zone is controlling the longer-term direction of the dollar index.

Daily Technical Forecast

Based on the early price action, the direction of the June U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the 50% level at 96.715 and the downtrending Gann angle at 96.76.

Bullish Scenario

Taking out and sustaining a rally over 96.76 will indicate the return of buyers. If this move creates enough upside momentum then look for a rally into the uptrending Gann angle at 96.950. The index could begin to accelerate to the upside if buyers can overcome this angle. Potential upside targets are a main top at 97.390 and another downtrending Gann angle at 97.510.

Bearish Scenario

A sustained move under 96.715 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into last week’s low at 96.405, followed by a main bottom at 96.365 and the main Fibonacci level at 96.350. The latter is a potential trigger point for an acceleration into an uptrending Gann angle at 96.06.

Overview

Watch the Euro today. Traders may decide to take profits after last week’s steep rally. If the Euro breaks hard then look for the June U.S. Dollar Index to possibly spike to the upside.