US Dollar Index (DX) Futures Technical Analysis – July 21, 2017 Forecast

James Hyerczyk
US Dollar Index
US Dollar Index

With the Euro sitting near a two-year on Friday, I don’t expect the September U.S. Dollar Index to move much. Because of its weighting in the index, the Euro controls the direction.

We could see some volatility today after the European markets close because a few of the big banks controlling the long side will be gone for the week-end. Speaking of big banks, the word is that many went short into the ECB decision and Draghi press conference on Thursday so the rally we saw wasn’t only aggressive buying. There was a lot of short-covering.

These big traders were betting on Euro weakness and that the rally wouldn’t last. They were hoping that Draghi would attempt to talk down the currency since a sharply higher Euro could damage the still frail economy. They were right on the story, the ECB tried to weaken the Euro when they would apply more stimulus if the situation warranted it.

How much can the dollar index break? The Euro is more than 50% of the index and according to Deutsche Bank, it remains about 15 percent undervalued against the dollar on a purchasing parity basis, so there is plenty of room to the downside.

Daily September U.S. Dollar Index

Technical Analysis

The main trend is down according to the daily swing chart. However, the index is down eight days from its most recent top, putting the market in the window of time for a potentially bullish closing price reversal bottom.

The index is currently straddling an old bottom at 93.97. The nearest downside target is the August 18, 2016 main top at 93.58. The nearest upside target is an old bottom at 94.55.


The index has been walking down a steep downtrending angle from the 95.960 top at 93.96 today. Trader reaction to this angle will determine the direction of the index today.

A sustained move over 95.96 will indicate the presence of buyers. Overtaking yesterday’s close at 94.117 will put the index higher for the session and in a position to form a closing price reversal bottom.

A sustained move under 95.96 will signal the presence of sellers. This could lead to some late session selling pressure with the next target 93.58.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.