US Dollar Index (DX) Futures Technical Analysis – Close Below 94.13 Forms Potentially Bearish Weekly Reversal Top

June U.S. Dollar Index futures settled lower on Thursday for a second day. The price action was driven by a combination of the easing of tensions over geopolitical events in Italy, fear of a trade war between the United States and the European Union, Canada and Mexico and a dovish outlook for further rate hikes by the Fed later this year.

The direction of the market on Friday is likely to be determined by trader reaction to the U.S. Non-Farm Payrolls report, specifically the average hourly earnings portion of the report. Traders are looking for an increase of 0.20%. A lower than expected number should dampen the odds of as many as three more rate hikes this year. This should weaken the U.S. Dollar against a basket of currencies. A stronger number should put upside pressure on the index.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The two-day pullback has made 94.975 a new main top. A trade through this level will signal a resumption of the uptrend.

A trade through 93.69 will indicate the selling is getting stronger. A move through 93.20 will change the minor trend to down. This will also signal a shift in momentum to the downside.

The main range is 92.115 to 94.975. Its retracement zone at 93.545 to 93.21 is the first downside target. Inside this zone is a major Fibonacci level at 93.35. Since the main trend is up, buyers could show up on a pullback into this zone.

The next key support target zone is 92.30 to 91.90. Inside this zone is a main bottom at 92.115.

The new short-term range is 94.975 to 93.690. Its retracement zone is 94.33 to 94.48. This zone is the first upside target. It’s important because aggressive counter-trend sellers could come in on a test of this zone in an effort to form a secondary lower top. This chart pattern will indicate that the selling is greater than the buying at current price levels.

Daily Swing Chart Technical Forecast

The catalyst behind today’s price action will be the U.S. Non-Farm Payrolls report. A bullish report will drive the index into 94.33 to 94.48. Sellers could show up on the first test of this area. Taking out 94.84 could trigger an acceleration into 94.975 or higher.

A bearish jobs report is likely to drive the index into a series of levels at 93.545, 93.35, 93.21 and 93.20. The acceleration to the downside could begin on a clean breakout under 93.20.

Traders should also pay attention to the price action and order flow around 94.13. This is last week’s close. Finishing below this level will produce a potentially bullish closing price reversal top, signaling the end of the rally, at least temporarily.