US Dollar Index (DX) Futures Technical Analysis – May 25, 2017 Forecast

June U.S. Dollar Index futures are under pressure early Thursday as investors continue to digest the less-hawkish-than-expected Federal Reserve Meeting Minutes released late Wednesday. The current price action suggests investors are going to have to make a decision soon regarding the effects of U.S. politics and monetary policy on the U.S. Dollar.

With interest rate futures implying that traders saw about an 83 percent chance of a rate increase at the Fed’s June meeting, the current price action suggests that dollar investors are focusing more on the Fed’s balance sheet and their strategy in terms of how to manage that.

The price action also suggests that dollar investors are reluctant to get long the dollar given the problems that face President Trump and ahead of former FBI Director James Comey’s testimony before the Senate Intelligence Committee next week.

Technical Analysis

The main trend is down according to the daily swing chart. The index is far from turning the main trend to up, but the index is in the window of time for a potentially bullish closing price reversal bottom. Also a trade through 97.375 will turn the minor trend to up on the daily swing chart.

A trade through 96.700 will signal a resumption of the downtrend. If this price is taken out with strong volume then we could see an acceleration to the downside with the November 9, 2016 main bottom at 95.75 the next major target.

Forecast

Based on the current price at 96.93 and the early price action, the direction of the dollar index today is likely to be determined by trader reaction to the long-term uptrending angle at 96.815.

A sustained move over 96.815 will indicate the return of buyers. This could generate enough upside momentum to test a resistance cluster at 97.270. This is not only resistance, but also the trigger point for an acceleration to the upside with 97.89 the next potential target.

A sustained move under the long-term uptrending angle at 96.815 could be a disaster for the dollar. The next target is 96.70. Look for a possible acceleration to the downside under this minor bottom with 95.75 the next target.

The dollar index has to hold the 96.815 to 96.70 area or it’s going to get hit hard.