U.S. Dollar Index Futures (DX) Technical Analysis – May 21, 2019 Forecast

The U.S. Dollar is trading higher against a basket of major currencies on Tuesday with the greenback posting gains against all major components that make up the index. The primary catalyst behind the early strength is rising U.S. Treasury yields. Essentially, the divergence between the monetary policy of the U.S. Federal Reserve and the other major central banks is driving the price action.

At 06:46 GMT, June U.S. Dollar Index futures are trading 97.900, up 0.136 or +0.14%.

A slight easing of tensions in the escalating trade war between the U.S. and China is helping to drive up Treasury yields, which is making the U.S. Dollar a more attractive assets. Furthermore, what Fed Chair didn’t say is also being seen as a positive for the greenback.

Earlier in the evening, Powell said it was premature to make a judgment about the impact trade and tariff issues could have on monetary policy. This helped boost yields because it dampened concerns over a U.S. recession later in the year and a potential interest rate cut.

The weaker Euro is also helping to underpin the dollar index. Concerns over the Italian economy and nervousness ahead of the May 23-26 European parliamentary election are helping to pressure the single currency.

Later today, investors will get a chance to react to a report on European Consumer Confidence as well as a U.S. report on Existing Home Sales. Fed speakers are also on tap.

Daily Technical Analysis

The main trend is up according to the daily swing chart. Taking out 98.085 will reaffirm the uptrend. A trade through 96.810 will change the main trend to down. However, this is highly unlikely.

Today is the sixth day up from the last main bottom. Counter-trend traders may want to start watching for a closing price reversal top. The chances of this chart pattern will increase if U.S. Treasury yields resume their downtrend.

On the downside, a retracement zone at 97.60 to 97.45 is support.

Daily Technical Forecast

Based on the early price action and the current price at 97.900, the direction of the June U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at 97.950.

Bullish Scenario

A sustained move over 97.950 will indicate the presence of buyers. This could generate the upside momentum needed to take out the April 26 main top at 98.085. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 97.950 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the next downtrending Gann angle at 97.820.

Taking out 97.820 could trigger an acceleration to the downside with the next target a price cluster at 97.60, 97.56 and 97.55.