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James Hyerczyk
U.S. Dollar Index

The U.S. Dollar finished marginally higher against a basket of currencies on Friday after touching its highest level since August 2, nonetheless, the market still managed to post a solid gain for the week. Helping to boost the greenback were firmer U.S. Treasury yields and a weaker Euro. The dollar was supported by a stronger-than-expected buildings permits report. Meanwhile, the Euro was pressured by reports saying the European Central Bank (ECB) was planning an aggressive attempt to jumpstart the economy.

On Friday, September U.S. Dollar Index futures settled at 98.007, up 0.002 or +0.00%.

Besides the weaker Euro, the index was boosted by weaker demand for the safe-haven Japanese Yen and Swiss Franc. Both currencies fell as worries over a U.S. recession eased. The greenback was pressured by a strong British Pound and Canadian Dollar.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The index closed within striking distance of its last main top at 98.700. A trade through this level will negate a closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 96.980.

The short-term range is 98.700 to 96.980. Its retracement zone is 98.045 to 97.840. On Friday, the buying wasn’t strong enough to sustain a rally over this zone and the index settled inside it.

The intermediate range is 96.320 to 98.700. Its retracement zone at 97.510 to 97.230 is support.

The main range is 95.365 to 98.700. Its retracement zone at 97.035 to 96.640 is controlling the near-term direction of the index. It stopped the selling at 96.980 on August 6.


Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at 98.007, the direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at 98.045.

Bullish Scenario

A sustained move over 98.045 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the main top at 98.700 over the near-term. A weaker Euro and Japanese Yen will help support the dollar the most.

Bearish Scenario

A sustained move under 98.045 will signal the presence of sellers. The first target is the short-term 50% level at 97.840. Since the trend is up, buyers could come in on the first test of this level. If it fails then look for a potential acceleration into the intermediate 50% level at 97.510.

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