US Dollar Index (DX) Futures Technical Analysis – April 25, 2018 Forecast

The dollar index recovered from yesterday’s setback to post a new four-month high on Wednesday. The move was driven by a rise in the benchmark 10-year Treasury yield above 3 percent, expectations for further rate increases by the Fed and the anticipation of higher inflation.

At 1115 GMT, June U.S. Dollar Index futures are trading 90.795, up 0.258 or +0.28%.

Also helping to boost the index is a weaker Euro. The single-currency is being pressured ahead of tomorrow’s European Central Bank monetary policy meeting. Traders are worried that the ECB’s reluctance so far to signal any acceleration in policy will leave the currency vulnerable against the dollar, which is being supported by the Fed’s hawkish stance.

Daily Technical Analysis

The main trend is up according to the daily swing chart. Today’s rally took out yesterday’s high and negated the potentially bearish closing price reversal top which was never confirmed.

The index is up six days from its last main bottom. Tomorrow, it will enter the window of time for a closing price reversal top. This could be significant especially if it comes while the market is testing a major retracement area. Furthermore, we may see some position-squaring or profit-taking ahead of Friday’s major U.S. GDP report.

The primary upside target today is a long-term 50% level at 91.125. We could see a technical bounce on the first test of this level, but the index could strengthen if buyers can establish support at the 50% level.

Daily Technical Forecast

Based on the early trade, the direction of the dollar index the rest of the session will be determined by trader reaction to the long-term downtrending Gann angle at 90.76.

A sustained move over 90.76 will signal the presence of buyers. This move could generate the upside momentum needed to challenge an uptrending angle at 91.03, followed closely by the major 50% level at 91.125.

A sustained move under 90.76 will indicate the presence of sellers. This could trigger a break into a steep uptrending Gann angle at 90.45. This angle, moving at a rate of .25 per day, has been guiding the market higher since the 88.945 bottom on April 17. We could see a technical bounce on the first test of this angle, but if it fails, we could see an acceleration to the downside.