US Dollar Index (DX) Futures Technical Analysis – Bullish Tone Could Develop Over 92.34 This Week

The U.S. Dollar closed higher last week against a basket of currencies, helped by a hawkish U.S. Federal Reserve. Although the Federal Open Market Committee decided to leave its benchmark interest rate unchanged, it did unveil its plan to begin reducing its $4.5 trillion balance sheet while keeping open the possibility of a third rate hike this year in December.

The U.S. settled the week at 91.967, up 0.022 or +0.02%.

The hawkish Fed helped drive up U.S. Treasury yields, making the U.S. Dollar a more attractive investment. Late in the week, the index did give up some ground due to flight-to-safety buying after North Korea threatened to detonate a hydrogen bomb in the Pacific Ocean, however, buyers were able to claw back most of the loss.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through 93.840 will change the main trend to up. A move through 90.795 will signal a resumption of the downtrend.

The major support is a long-term retracement zone at 91.61 to 89.56. During the week-ending September 8, the dollar index made its low for the year at 90.795 which was inside the zone.

Weekly Forecast

Based on last week’s close at 91.967, the direction of the index this week is likely to be determined by trader reaction to the short-term downtrending angle at 92.34.

Overtaking 92.34 will indicate the buying is getting stronger with the next target angle coming in at 93.09.

Overcoming 93.09 could create enough upside momentum to change the main trend to up on a move through 93.84. This could lead to a test of the long-term downtrending angle at 94.03. This angle is the trigger point for an acceleration to the upside.

A failure to overcome or sustain a rally over 92.34 will signal the selling is greater than the buying at current price levels. At this point, buyers could continue building a support base, or they could go after the support at 91.61 and the main bottom at 90.795.