US Dollar Index (DX) Futures Technical Analysis – August 22, 2016 Forecast

There are no major economic reports today so September U.S. Dollar Index traders are likely to dwell on the hawkish comments from U.S. Federal Reserve Vice Chairman Stanley Fischer made over the week-end. He basically saw reasons for a near-term interest rate hike.

Mr. Fischer, the Fed’s second-highest ranking official, told a crowd in Aspen, Colorado, the central bank is close to hitting its targets for U.S. employment and inflation.

“Looking ahead, I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes,” he added.

Additionally, Fischer said that core inflation is “within hailing distance” of the Fed’s 2 percent target and that employment had increased “impressively” since its bottom in 2010.

Later in the week, investors will get the opportunity to react to the latest U.S. Durable Goods data and Preliminary GDP. However, the main focus will be on Fed Chair Janet Yellen who is scheduled to deliver a speech on Friday at the Jackson Hole, Wyoming central bankers’ symposium.

TECHNICAL ANALYSIS

TREND INDICATOR SWING CHART

The main trend is down according to the daily swing chart. The trend will turn up on a trade through 96.50.

The shift in momentum to the upside earlier today has helped make 94.05 a new minor bottom.

RETRACEMENT ZONES

The main range is 93.025 to 97.62. Its retracement zone is 95.32 to 94.78. The index is currently straddling the lower or Fibonacci level at .94.79.

The new short-term range is 96.50 to 94.05. Its retracement zone is 95.28 to 95.56. This zone is the primary upside target. It also straddles the main 50% level at 95.32.

GANN ANGLES

On the upside, the first pair of Gann resistance angles comes in at 95.12 and 95.13.

On the downside, the support angle moves up to 94.37.

WHAT TO DO TODAY

Based on the early price action and the upside momentum, the direction of the September U.S. Dollar Index today will be determined by trader reaction to the major Fibonacci level at 94.78.

A sustained move over 94.78 will indicate the buying is getting stronger. This could create enough upside momentum to challenge the downtrending angle at 95.13. Look for a technical bounce on the first test of this angle, but if it is taken out then look for the rally to extend into 95.28 to 95.32.

The inability to sustain a rally over 94.78 will signal the presence of sellers. The daily chart is open to the downside with the next target a long-term uptrending angle at 94.37.

Watch the price action and read the order flow at 94.78. I like the long side on a move over this level, but I’d like to see increasing volume on the move.