US Dollar Index (DX) Futures Technical Analysis – April 27, 2017 Forecast

June U.S. Dollar Index futures are trading slightly higher shortly before the regular session opening on Thursday. The market is also trading inside yesterday’s range, suggesting investor indecision and impending volatility.

The market is currently straddling a major retracement level and has been consolidating since Monday’s gap-lower opening. The price action indicates that perhaps investors are waiting for a catalyst that could trigger the next major move.

Yesterday’s release of President Trump’s long awaited tax reform plan failed to fuel a rally by the dollar because investors were disappointed by the lack of surprises in the plan. Additionally, investors are waiting for the European Central Bank’s policy announcement before making their next move.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through Tuesday’s low at 98.565 will signal a resumption of the downtrend.

Taking out 99.24 could trigger enough buy stops to fill in the gap left by Monday’s weak opening. However, a trade through 99.935 will change the minor trend to up.

The major retracement zone is 98.81 to 99.75. Trader reaction to this zone will determine the longer-term direction of the market. At this time there is a downside bias because the index is trading below the 50% level at 99.75 and straddling the 61.8% level at 98.81.

Today, the index is trading above the 61.8% level at 98.81 suggesting the presence of buyers.

Forecast

Based on the current price at 98.995, the direction of the index is likely to be determined by trader reaction to the Fib level at 98.81.

A sustained move over 98.81 will indicate the presence of buyers. The daily chart indicates there is plenty of room to the upside with the next major target a resistance cluster at 99.75 to 99.77. In order to get to this zone, however, there is going to have to be a major change in investor sentiment.

If 98.81 fails as support then look for a plunge into the steep downtrending angle at 98.27. Crossing to the weak side of this angle will put the dollar index in a bearish position.