US Dollar Index (DX) Futures Technical Analysis – August 23, 2017 Forecast

September U.S. Dollar Index futures are trading lower. Profit-taking and position-squaring ahead of the start of the central bankers’ symposium at Jackson Hole is pressuring the market.

Traders have the opportunity to react to a series of U.S. economic reports including Flash Manufacturing PMI, Flash Services PMI and New Home Sales. Additionally, FOMC Member Robert Kaplan is scheduled to speak.

Kaplan will be delivering a speech at 1305 GMT at the central bankers’ symposium at Jackson Hole, Wyoming.

On August 17, Dallas Fed President Robert Kaplan called for patience on another rate hike, saying he’d like to see more progress on inflation moving to its 2% target.

He does, however, appear to be on board with beginning paring the Fed’s balance sheet “in the near future” – i.e. September.

These comments were perceived as dovish so he is widely expected to continue down that path on Wednesday. This may put pressure on U.S. Treasury yields, weakening the U.S. Dollar.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at 94.055 on August 16.

A trade through 93.83 will change the main trend to down. This could lead to a test of the next main bottom at 92.39. A move through 94.055 will signal a resumption of the uptrend with 94.115 the next target.

The main range is 94.115 to 92.39. Its 50% level or pivot is 93.25. This price is controlling the direction of the market. The current move below the pivot is giving the market a downside bias.

The short-term range is 94.055 to 92.92. Its retracement zone at 93.49 to 93.62 is acting like resistance.

Forecast

Based on the current price at 93.22, the direction of the dollar index today will be determined by trader reaction to the major pivot at 93.25.

A sustained move under 93.25 will indicate the presence of sellers. The daily chart is open to the downside so we could see a near-term acceleration into this week’s low at 92.92, followed by an uptrending angle at 92.86 and the main bottom at 92.83.

The trend changes to down on a move under 92.83. This could drive the market into the next uptrending angle at 92.62. This is the last potential support angle before the 92.39 main bottom.

Holding above 93.25 could trigger a labored rally with a series of potential resistance targets at 93.33, 93.43 and 93.49.

The index starts to expand over 93.49 with upside targets at 93.62 and 93.74.