US Dollar Index (DX) Futures Technical Analysis – July 12, 2017 Forecast

September U.S. Dollar Index futures are trading higher shortly before the regular session opening. The market is reversing earlier weakness which suggests position-squaring ahead of the first day of Fed Chair Janet Yellen’s first day of testimony before Congress.

Yellen will deliver the Fed’s semiannual report on monetary policy at 1400 GMT. The actual report came out on Friday, July 7. The Fed released it early so that members of Congress could have time to read it and ask intelligent questions. I suspect that Yellen will use the report as a script and not deviate too much from it.

If she gets a hard question then she is likely to spin it in the direction that causes the least amount of volatility in the financial markets.

Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Tuesday when the index plunged through the July 7 main bottom at 95.525. The new main top is 95.96. A trade through this top will change the main trend to up. This could lead to a further rally into the next main top at 96.255.

The next downside target is the June 30 bottom at 95.225. This is followed by the September 22, 2016 main bottom at 94.97.

The main range is 95.225 to 96.255. Its retracement zone at 95.62 to 95.74 is a new upside target.

Forecast

Based on the current price at 95.47 and the earlier price action, the direction of the index today is likely to be determined by trader reaction to the uptrending angle at 95.48.

A sustained move over 95.48 will signal the presence of buyers. This could create enough upside momentum to challenge the Fibonacci level at 95.62, followed by the downtrending angle at 95.71. This is followed by the 50% level at 95.74.

A sustained move under 95.48 will indicate the return of sellers. This could trigger a retest of the next uptrending angle at 95.35. This is the last potential support angle before today’s intraday low at 95.295 and the main bottom at 95.225.

If 95.225 fails then look out to the downside. The next target is 94.97.