US Dollar Index (DX) Futures Technical Analysis – Dollar Actually Up Against Yen, Down Against Export-Currencies

The U.S. Dollar was mixed against the major currencies, but because of the way the currencies are weighted, the June U.S. Dollar Index is trading sharply lower. The dollar rose against the Japanese Yen on Tuesday as investors increased demand for risk. However, relatively high-yielding currencies such as the Australian Dollar, New Zealand Dollar and the Canadian Dollar all rose against the greenback.

A jump in the Euro had the most negative effect on the dollar index because of its high weighting.

Daily 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 90.295 on Friday.

The index isn’t in a position to change the trend to down, but it is testing key retracement levels.

The main range is 90.490 to 88.530. Its retracement zone at 89.510 to 89.741 is providing resistance.

The short-term range is 88.530 to 90.295. Its retracement zone at 89.413 to 89.204 is currently being tested. Since the main trend is up, buyers may step in on a test of this zone. Additional support is the major retracement zone at 89.160 to 88.846.

The best downside target is the support cluster at 89.204 to 89.160. We could see a technical bounce on the first test of this area.

Daily Technical Forecast

Based on the late session price action, the direction of the index into the close is likely to be determined by trader reaction to the 50% level at 89.413.

A sustained move under 89.413 will indicate the presence of sellers. If this creates enough downside momentum then look for a drive into the support cluster at 89.204 to 89.160, followed by an uptrending Gann angle at 89.09. This area has to hold as support or the index could plunge to 88.846 to 88.810.

A sustained move over 89.413 will signal the return of buyers. This could lead to a retest of 89.51, followed by a Gann angle cluster at 89.65 to 89.66.

Watch the price action and read the order flow at 89.41 the rest of the session. This should tell us if the buyers are regaining control, or if the sellers are exerting more control.