US Dollar Index (DX) Futures Technical Analysis – October 23, 2017 Forecast

December U.S. Dollar Index futures are trading higher shortly before the U.S. opening. The bullish price action is being driven by a weaker Japanese Yen and Euro. The Dollar is picking up strength due to the divergence between the monetary policies of the U.S. Federal Reserve and the Bank of Japan.

Over the week-end, the election results in Japan assured the continuation of a loose monetary policy while the Fed is on course to raise rates. Position-squaring ahead of the European Central Bank’s monetary policy decision on Thursday is likely pressuring the Euro.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 94.10 will signal a resumption of the uptrend. A trade through 92.59 will change the main trend to down.

The primary upside target is the major retracement zone at 94.05 to 94.82. The lower or 50% level of this range at 94.05 provided resistance on October 6 when the index formed a main top at 94.10.

Daily Forecast

Based on the current price at 93.86 and the upside momentum, the index is likely to challenge the major 50% level at 94.05 and the main top at 94.10.

If the upside momentum is strong enough to take out 94.10 with conviction then look for a possible acceleration to the upside with 94.82 the next major upside target.

If sellers come in strong enough to stop the rally then we could see a pullback into the nearest uptrending angle at 93.34. This angle has been guiding the index higher since October 13. Since the main trend is up, buyers are likely to step in on a test of this angle.

Barring any surprise news events, the tone of the index until Thursday is likely to remain bullish due to rising U.S. Treasury yields. On October 26, the tone may change with the ECB announcement.