US Dollar Index (DX) Futures Technical Analysis – January 18, 2017 Forecast

March U.S. Dollar Index futures are trading higher, but inside yesterday’s range. This chart pattern indicates investor indecision and impending volatility. We’re looking at an early inside move because few traders are willing to take positions ahead to today’s U.S. consumer inflation report at 1330 GMT.

The CPI report is supposed to show the economy grew by 0.3% last month. This equates to a 2.1% annualized rate, which would put it above the Fed’s 2.0% target. Coming in over 2.1% should be supportive for the dollar index, but gains are likely to be limited because of worries about Trump’s ability to run a government.

Technical Analysis

The main trend is down according to the daily swing chart. However, today’s session begins with the index in the window of time for a potentially bullish closing price reversal bottom.

Taking out 100.235 will signal a resumption of the down trend. The December 8 main bottom at 99.25 will be the next downside target.

The main range is 99.25 to 103.815. The index is trading under its retracement zone at 100.995 to 101.535, giving it a downside bias. This zone is new resistance.

The new short-term range is 103.815 to 100.235. If there is a breakout to the upside then its retracement zone at 102.025 to 102.445 is the primary upside target.

Forecast

Based on the current price at 100.660, the first upside targets come in at 100.875 and 100.995. The major target is 101.315. This price has been guiding the market lower for 10 sessions. The market could spike to the upside on a move through 101.315, making 101.535 the next target.

On the downside, the two targets are 100.065 and 99.655. The latter is the last potential support angle before the 99.25 main bottom.

Be careful selling weakness today because of the possibility of a closing price reversal bottom. And don’t expect too much on an upside breakout either because of concerns over Trump.