US Dollar Index (DX) Futures Technical Analysis – March 24, 2017 Forecast

June U.S. Dollar Index futures sat in a range all-session on Friday as investors awaited the vote on health care reform. The price action suggests that investors don’t know how to play the vote which is scheduled for 1930 GMT.

Some traders are saying that not passing the bill be bearish for the dollar because it will indicate a weaker President Trump and that perhaps he won’t have the power to move ahead with tax reform, increased fiscal spending and less regulation.

Others are saying it will be bullish for the dollar because it means the President can move forward with his plans.

So essentially, it’s a toss-up. Ultimately, the direction of the dollar will be dictated by the direction of U.S. Treasury yields. Support for the dollar will continue to erode if Treasurys continue to fall.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 99.145 will reaffirm the downtrend. The index isn’t close to turning higher, but we are in the window of time for a potentially bullish closing price reversal bottom. This could lead to a powerful counter-trend rally.

The main retracement zone is 99.750 to 98.806. The market is currently testing this zone while straddling the 50% level at 99.750.

Forecast

Breaking News:  The American Health Care Act has been pulled from the floor of the House of Representatives for a second time. Now the debate begins. Does this put Trump in a bad position? Does this mean his power is weaker? What does this mean for his other policies?

The price action in the stock market late in the day was mixed. Going into the vote, stocks were breaking. This was emotionally-based selling. After the vote was cancelled, stocks started to recover. This may be an indication of relief.

If stocks can recover then perhaps investors are thinking this is a bullish event. However, the direction of the U.S. Dollar will be largely dictated by the direction of Treasury yields. To some, a no vote means buy bonds. And if bonds are being bought then rates are coming down. And if rates will come down then so will the U.S. Dollar.