US Dollar Index (DX) Futures Technical Analysis – Major Long-term 50% Level at 91.61 Controlling Price Action

The U.S. Dollar close higher against a basket of currencies with investors reacting primarily to surge in U.S. Treasury yields. Short-covering due to oversold conditions also contributed to the strength. The Greenback was also underpinned by the news that the destruction bought by Hurricane Irma was less severe than feared.

For the week, December U.S. Dollar Index futures settled at 91.653, down -0.236 or -0.26%.

After a strong shift in momentum to the upside early in the week, the dollar broke sharply as investors reacted to a series of key U.S. economic reports. On September 13, a report showed producer inflation rose 0.2%, slightly below the 0.3% estimate. On September 14, another report showed consumer inflation rose 0.4% last month. Finally, on Friday, retail sales surprised investors with a -0.2% read.

The PPI and CPI data showed growth, but not enough to convince investors that the Fed would shift from dovish to hawkish before the end-of-the-year.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through 93.840 will change the main trend to up.

A move through 90.795 will signal a resumption of the downtrend.

The market is currently testing a major long-term 50% to 61.8% retracement zone at 91.61 to 89.56. So far, it’s been acting as pretty good support. The low the week-ending September 8 at 90.795 was reached inside this zone.

Weekly Forecast

Based on last week’s close at 91.65, the direction of the index this week is likely to be determined by trader reaction to the major 50% level at 91.61.

A sustained move over 91.61 will indicate the presence of buyers. This could create enough upside momentum to challenge a pair of downtrending angles at 92.59 and 93.22. The latter is the last potential resistance angle before the 93.84 main top.

If 93.84 is taken out then the trend will change to up on the weekly chart with 94.03 the next Gann angle target.

A sustained move under 91.61 will signal the presence of sellers. The next target is the September low at 90.795. If this level fails then the selling will resume with 89.56 the next major target.