US Dollar Index (DX) Futures Technical Analysis – June 13, 2016 Forecast

June U.S. Dollar Index futures closed higher last week amid increased demand for lower-risk assets. This trend is likely to continue this week if investors continue to shed stocks and if the worries about a UK exit from the European Union persist.

The market has already decided the Fed is going to refrain from hiking rates in June so the focus in the statement on June 15 will be on what it says if anything about July. The dollar may firm if the Fed leaves open the possibility of a July rate hike. The rally could be capped or the market may begin to sell-off again if the central bank hints that a rate hike in July is no longer a possibility.

Technically, the main trend is up according to the daily swing chart. Despite the recent seven session break, the main trend never turned down and the market found buyers on a test of the Fibonacci level of a key retracement zone.

The main range is 91.88 to 95.96. Its retracement zone is 93.92 to 93.44. This zone provided support last week when the index bottomed at 93.41.

The short-term range is 95.96 to 93.41. Its retracement zone is 94.69 to 94.88. The lower or 50% level of this range was tested on Friday. This zone is very important because aggressive counter-trend sellers are going to try to produce a potentially bearish closing price reversal top and buyers are going to try to drive the market through this zone.

Based on the close at 94.56, the direction of the market today is likely to be determined by trader reaction to the 50% level at 94.69 and the downtrending angle at 94.71.

A sustained move over 94.71 will indicate the presence of buyers. This could create enough upside momentum to challenge the Fibonacci level at 94.99. This is another trigger point for an acceleration into 95.29 then 95.34.

A sustained move under 94.69 will signal the presence of sellers. This will indicate that sellers are coming in to defend the short-term retracement zone. The daily chart is open to the downside under this angle with the next target angle coming in at 94.16.

Watch the price action and read the order flow at 94.69 to 94.71 today. Trader reaction to this zone will determine the tone and direction of the market today.