U.S. Dollar Index Futures (DX) Technical Analysis – May 16, 2019 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 97.450.
James Hyerczyk

The U.S. Dollar Index is trading higher on Thursday, helped by weakness in the Euro, British Pound and Japanese Yen, three of the majors that make up the basket of currencies. Stronger-than-expected U.S. economic data is also helping to underpin the greenback. Increased demand for risk on the hope of a trade deal between the U.S. and China is also providing support.

At 13:37 GMT, June U.S. Dollar Index futures are trading 97.540, up 0.164 or +0.17%.

The Euro held its ground early in the session in reaction to reports that President Trump was expected to delay implementing tariffs on cars and parts by up to six months. The single-currency turned lower on renewed geopolitical turmoil in Italy and worries over the upcoming European elections.

A stronger stock market is encouraging investors to trim hedge positions in the safe-haven Japanese Yen. Higher Treasury yields are also helping to make the U.S. Dollar a more attractive asset than the Yen.

In the U.S., key reports showed an improving economy, which helped reduce worries about a U.S. recession. Building Permits beat the forecast with a 1.30 million unit read. The Philadelphia Fed Manufacturing Index came in at 16.6, better than the 10.0 forecast and nearly double last month’s 8.5.

Housing Starts were also impressive with 1.24 million units versus a 1.21 million forecast. The previous month was revised higher to 1.17 million units. Finally, weekly unemployment claims came in lower than expected at 212K. Traders were looking for 220K.

Daily June U.S. Dollar Index

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 97.865 will change the main trend to up. A move through 96.810 will signal a resumption of the downtrend.

The minor trend changed to up earlier today on a trade through 97.510. This move shifted momentum to the upside.

The main range is 96.365 to 98.085. Its retracement zone at 97.225 to 97.022 is new support. Holding above this zone is helping to generate an upside bias.

The short-term range is 98.085 to 96.810. The market is currently testing its retracement zone at 97.450 to 97.600. Overtaking this zone will indicate the buying is getting stronger.

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 97.450.

Bullish Scenario

Holding above 97.450 will indicate the presence of buyers. This could lead to a test of the Fibonacci level at 97.600, followed closely by the downtrending Gann angle at 97.650. This is the trigger point for an acceleration to the upside with the next angle coming in at 97.865.

Bearish Scenario

A failure to hold 97.450 will indicate the presence of sellers. The daily chart is wide open under this level with the next major targets 97.225 and 97.185.

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