US Dollar Index (DX) Futures Technical Analysis – April 6, 2017 Forecast

June U.S. Dollar Index futures are trading slightly higher shortly before the regular session opening. The market is essentially trading inside yesterday’s range which suggests investor indecision and impending volatility. Traders are facing the start of the two-day meeting between President Donald Trump and Chinese President Xi Jinping. Additionally, traders may also be a little hesitant about jumping in front of Friday’s U.S. Non-Farm Payrolls report.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since March 27. A trade through 100.990 will indicate that momentum is getting stronger.

The main range is 102.125 to 98.67. Its retracement zone at 100.40 to 100.80 is the primary upside target. The market has been testing this zone for six consecutive sessions. It is controlling the longer-term direction of the index.

Look for a strong upside bias to develop on a sustained move over the upper or Fibonacci level at 100.805 and for the downside bias to resume on a sustained move under the lower or 50% level at 100.40.

An uptrending angle at 100.67 also passes through this zone.

If there is a rally then the next upside target is a retracement zone at 101.45 to 101.99. If there is a break then the next downside target is the short-term retracement zone at 99.83 to 99.56.

Forecast

Based on the current price at 100.56 and the earlier price action, the direction of the index today is likely to be determined by trader reaction to the 50% level at 100.40.

A sustained move over 100.40 is likely to produce a labored rally with initial targets at 100.67, 100.81, 100.88 and yesterday’s high at 100.990.

Taking out 100.990 with conviction could trigger an acceleration to the upside with the next target a resistance cluster at 101.45 to 101.50.

If support fails at 100.40 then look for the start of a steep sell-off since the nearest support doesn’t come in until 99.83, 99.75 and 99.67.

If you don’t want to play in a choppy market then look for strength over 100.88 and weakness under 100.40.