US Dollar Index (DX) Futures Technical Analysis – Plenty of Room to Downside With 87.83 Next Target

The return of investor appetite for risk helped drive the Euro, New Zealand and Australian Dollars sharply higher on Monday, driving the U.S. Dollar sharply lower. Softening the selling pressure was the dollar’s rise against the Japanese Yen.

June U.S. Dollar Index futures settled at 88.604, down 0.429 or -0.48%.

In other news, data released by the Commodity Futures Trading Commission on Friday showed speculators’ net short positioning at a one-year high.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend was reaffirmed on Monday when sellers took out the March 7 main bottom at 88.915.

The daily chart shows there is plenty of room to the downside with the February 16 main bottom at 87.830 the next major downside target.

Daily Swing Chart Technical Forecast

The main range is 87.830 to 90.490. Its retracement zone is 88.85 to 89.16. The close under this zone is helping to give the index a downside bias. This zone is essentially controlling the longer-term direction of the market.

Based on Monday’s close at 88.604, the direction of the index today is likely to be determined by trader reaction to the Fibonacci level at 88.85.

A sustained move under 88.85 will indicate the presence of sellers. If selling volume continues to increase on the move then we should see an eventual test of the main bottom at 87.83.

Overcoming and sustaining a move over 88.85 will signal the presence of buyers. This could fuel a rally back to the 50% level at 89.16. Sentiment could shift to the upside if buyers can overcome this 50% level.