U.S. Dollar Index Futures (DX) Technical Analysis – September 5, 2019 Forecast

The U.S. Dollar is trading lower against a basket of major currencies on Thursday shortly before the regular session opening. The earlier strength from the announcement of the resumption of trade talks between the United States and China has vanished as sellers have regained control. The move is primarily being fueled by a strengthening Euro.

At 08:23 GMT, September U.S. Dollar Index futures are trading 98.340, down 0.053 or -0.05%.

It’s unclear what is driving the Euro higher, but I have to speculate it’s the events in the UK surrounding Brexit. Traders appear to be optimistic that a no-deal Brexit could be avoided. Furthermore, hawkish comments from the expected new ECB President Christine Legarde regarding monetary policy are also boosting the single-currency.

The British Pound is also being supported by the Brexit news, while the Canadian Dollar is strengthening in response to the Bank of Canada’s decision to leave interest rates unchanged and sounding less-dovish than investors had expected.

Helping to ease some of the downside pressure is weaker demand for the safe-haven Japanese Yen and Swiss Franc.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 99.33 will signal a resumption of the uptrend. A move through 97.370 will change the main trend to down. This is not likely today, but there is room to complete a normal 50% to 61.8% retracement.

The short-term retracement zone is 98.35 to 98.16. The main retracement zone is 98.120 to 97.880.

The two combine to form a key support cluster at 98.16 to 98.12.

Daily Technical Forecast

The daily chart pattern indicates that the direction of the September U.S. Dollar Index on Thursday centers on trader reaction to the price cluster at 98.370 to 98.350.

Bullish Scenario

A sustained move over 98.370 will indicate the presence of buyers. If this move is able to generate enough upside momentum then the index could retrace back into a downtrending Gann angle at 98.83.

Bearish Scenario

A sustained move under 98.350 will indicate the selling pressure is getting stronger. This could trigger a sharp break into a pair of retracement levels at 98.16 to 98.12. This is a very important area on the chart. Since the main trend is up, buyers are likely to come in on a test of this area.