US Dollar Index (DX) Futures Technical Analysis – March 30, 2017 Forecast

June U.S. Dollar Index futures touched a nine-day high early Thursday. The move was primary driven by a weaker Euro. It fell on reports that the European Central Bank is expected to maintain its low interest rate environment.

The dollar gained strength against the Euro following a report by Reuters that European Central Bank policymakers were wary of changing their policy message. Earlier in the month, the EUR/USD was boosted by a report that the ECB had discussed the possibility of raising interest rates before the end of its quantitative easing program.

In the U.S. markets on Thursday, investors will get the opportunity to react to the third release of U.S. Q4 GDP and weekly jobless claims figures. Investors will also hear from Fed officials Mester, Kaplan, Williams and Dudley.

New York Fed president William Dudley is probably going to be the most interesting because he is a permanent voter on the Federal Open Market Committee. He is expected to talk about current financial conditions and monetary policy.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has shifted to the upside. A trade through 98.67 will signal a resumption of the downtrend.

The major retracement zone at 98.81 to 99.75 provided support earlier this week. Holding above the 50% level at 99.75 will give the index an upside bias.

The main range is 102.125 to 98.67. Its retracement zone at 100.40 to 100.81 is the primary upside target. Since the main trend is down, watch for a technical bounce on the first test of this zone.

Forecast

Based on the current price at 100.01 and the early price action, the direction of the index today is likely to be determined by trader reaction to the 50% level at 99.75.

A sustained move over 99.75 will indicate the presence of buyers. This could generate the upside momentum needed to challenge the downtrending angle at 100.25. Watch for a technical bounce on the first test of this angle. If it is overtaken then look for the rally to continue into the retracement zone at 100.40 to 100.81.

A sustained move under 99.75 will signal the presence of sellers. This could drive the market into the next uptrending angle at 99.42.

Watch the price action and read the order flow at 99.75 all session. Trader reaction to this level will set the tone for the day. Also watch for volatility with the release of the U.S. GDP data at 1230 GMT.