U.S. Dollar Index Futures (DX) Technical Analysis – Straddling Key Fibonacci Level at 95.850Although we don’t expect much movement into Wednesday’s close, the direction of the September U.S. Dollar Index is likely to be determined by trader reaction to the main Fibonacci level at 95.850.
The U.S. Dollar is trading nearly flat against a basket of major currencies late Thursday as most of the major players have taken to the sidelines ahead of the start of the G-20 summit this weekend. The key event will be the meeting between U.S. President Trump and Chinese President Xi Jinping. Investors have been holding out hope for about two weeks that the two leaders would reach an agreement to end the trade conflict between the two economic powerhouses.
At 17:39 GMT, September U.S. Dollar Index futures are trading 95.765, up 0.040 or +0.04%.
After hitting a multi-month low earlier in the week, the index reversed to the upside after Federal Reserve Chairman Jerome Powell failed to commit to a rate cut in late July. Traders had priced in a 100% chance of a 25 basis point cut and about a 50% chance it would cut 50 basis points.
In other news, traders showed no reaction to the U.S. government report that showed the economy expanded at 3.1% in the first quarter, unchanged from it reading last month. The number hit the forecast, besides the number is three months old. Conditions have changed a lot since then.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, the closing price reversal bottom on June 25 and its confirmation today shifted momentum to the upside. If buyers can continue the move then we could see a 2 to 3 day rally or a 50% to 61.8% retracement of the recent break from 97.265.
A trade through 95.365 will negate the closing price reversal top and signal a resumption of the downtrend.
The index is currently trading on the weak side of a major retracement zone at 95.850 to 96.205. This zone is resistance. It’s also controlling the longer-term direction of the index.
The short-term range is 97.265 to 95.365. Crossing to the strong side of the main retracement zone should trigger a further rally into its retracement zone at 96.315 to 96.540.
Daily Technical Forecast
Although we don’t expect much movement into Wednesday’s close, the direction of the September U.S. Dollar Index is likely to be determined by trader reaction to the main Fibonacci level at 95.850.
A sustained move over 95.850 will indicate the presence of buyers. If this move is able to generate enough upside momentum over the near-term then look for an eventual move into the pair of 50% levels at 96.205 and 96.315.
A sustained move under 95.850 will signal the presence of sellers. The downside target is a minor pivot at 95.645, followed by the main bottom at 95.365. If the bottom fails then sellers will have a clean shot at the March 20 bottom at 94.700.