U.S. Dollar Index Futures (DX) Technical Analysis – Rally Fueled by Surprise Jump in Consumer Sentiment

The U.S. Dollar is trading higher against a basket of currencies on Friday, helped earlier by safe-haven buying related to tensions over U.S.-China trade relations. An unexpected jump in U.S. sentiment data led to a surge later in the session. The dollar is posting solid gains against the three main components of the basket – the Euro, Yen and Pound.

At 16:25 GMT, June U.S. Dollar Index futures are trading 97.780, up 0.102 or +0.10%.

The dollar was pressured early by a stronger Euro and Japanese Yen as investors sought protection against a drop in U.S. equity futures. Both currencies gave up those gains after the stock market turned positive in reaction to the announcement that President Trump is delaying by up to six months on whether to impose tariffs on imported cars and parts to allow for more time for trade talks with the European Union and Japan.

Against the British Pound, the dollar rose after cross-party Brexit talks collapsed and concern grew about the impact of Prime Minister Theresa May’s likely resignation would have on Britain’s exit from the European Union.

The U.S. Dollar was also helped by a sharp rise in Preliminary University of Michigan Consumer Sentiment. It came in at 102.4 versus a 97.8 forecast and 97.2 previous read.

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 with the main top at 98.085 the next likely upside target.

Support is the retracement zone at 97.60 to 97.45. Holding above this area will help maintain the upward bias.

The next support zone is 97.225 to 97.020.

Daily Technical Forecast

Based on the earlier price action and the current price at 97.780, 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 97.850.

Bullish Scenario

A sustained move over 97.850 will indicate the presence of buyers. The may create enough upside momentum to take out the main top at 97.865. This is a potential trigger point for an acceleration into the next downtrending Gann angle at 97.970. This is the last potential resistance before the 98.085 main top.

Bearish Scenario

A failure to overcome 97.850 or a sustained move under this angle will signal the presence of sellers. If this creates enough downside momentum then look for a retest of today’s intraday support at 97.60. Taking out this Fib level could drive the index into the 50% level at 97.45.