US Dollar Index (DX) Futures Technical Analysis – October 4, 2017 Forecast

December U.S. Dollar Index futures are trading lower shortly before the regular session opening. The selling actually started early Tuesday as investors reacted to a dramatic turnaround in the Euro.

The Euro represents 57 percent of the index so it exerts a strong influence on the price action. There were no major changes in the major fundamentals so the price action was likely related to profit-taking and position-squaring.

Traders are saying that today’s weakness is in response to concerns that President Trump is going to replace hawkish Fed Chair Janet Yellen with a dovish successor.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 93.775 will signal a resumption of the uptrend.

Traders are also responding to a pair of retracement zones. The first is 93.43 to 94.05. The second zone is 94.05 to 94.82.

The combination of these zones makes 94.05 the price to watch.

The new short-term range is 91.215 to 93.775. Its retracement zone at 92.49 to 92.19 is the primary downside target.

Daily Forecast

Based on the current price 93.285 (0922 GMT) and the earlier price action, the direction of the dollar index today is likely to be determined by trader reaction to the 50% level at 93.43.

A sustained move under 93.43 will indicate the presence of sellers. The daily chart indicates there is plenty of room to the downside. If the selling pressure increases then look for a possible acceleration to the downside with potential targets a 50% level at 92.49 and an uptrending angle at 92.47.

Overcoming and sustaining a move over the 50% level at 93.43 will indicate the presence of buyers. The first target is a steep uptrending angle at 93.72, followed by yesterday’s high at 93.775. Overtaking these levels will put the index in a position to challenge the major target at 94.05.

The December U.S. Dollar Index turns extremely bullish on a sustained move over 94.05.