U.S. Dollar Index Futures (DX) Technical Analysis – No Major Resistance Until 100.060

The U.S. Dollar rose against a basket of currencies on Wednesday as Federal Reserve Chairman Jerome Powell failed to indicate the need for further rate cuts after the Federal Open Market Committee delivered its first rate cut since the financial crisis. The news drove the Euro to a two-year low and the Japanese Yen to a two-month low.

On Wednesday, September U.S. Dollar Index futures settled at 98.330, up 0.500 or +0.51%.

In a widely expected move, the FOMC cut rates by 25 basis points to help tighten the economy against the negative impact of the trade dispute between the United States and China.

Shortly afterwards, Fed Chair Powell said in his press conference, “it’s not the beginning of a long series of rate cuts.” He followed that comment by saying, “I didn’t say it’s just one rate cut.”

At the end of the day, the yield on the benchmark 10-year Treasury note, settled lower and the 2-year Treasury yield, the one more sensitive to changes in Fed policy, rose 2 basis points to 1.872%. This was enough to make the U.S. Dollar a more attractive asset.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The next major target is the January 2017 main top at 100.060.

The main trend will change to down on a trade through 96.320. This is highly unlikely today, but due to the prolonged move up in terms of price and time, the index is in the window of time for a potentially bearish closing price reversal top. If confirmed, this chart pattern could trigger the start of a 2 to 3 day counter-trend break.

The minor trend is also up. A trade through 97.755 will change the minor trend to down. This will also shift momentum to the downside.

Daily Swing Chart Technical Forecast

Based on Wednesday spike to the upside and the strong close at 98.330, the direction of the September U.S. Dollar Index on Thursday is likely to be determined by trader reaction to the high at 98.445.

Bullish Scenario

Taking out and sustaining a rally over 98.445 will indicate the presence of buyers. There is no major resistance so any rally could be stopped by a closing price reversal top. However, if the upside momentum continues then buyers will attempt to claw their way back to the January 2017 main top at 100.060.

Bearish Scenario

Taking out 98.445 then turning lower for the session will be the best sign of selling pressure. This will also put the market in a position to form a closing price reversal top.

If this move is able to create enough downside momentum then look for sellers to go after the minor bottom at 97.755. This will change the minor trend to down and shift momentum to down as well. This could trigger an acceleration to the downside with the next target the minor bottom at 97.220.