US Dollar Index (DX) Futures Technical Analysis – Price Action Suggests Presence of Aggressive Counter-Trend Sellers

The U.S. Dollar is trading slightly lower against a basket of currencies early Thursday, but remains within striking distance of its 2018 high reached the previous session.

At 0548 GMT, June U.S. Dollar Index futures are trading 93.135, down 0.146 or -0.16%.

Yesterday’ rally was primarily supported by another rise in U.S. Treasury yields. The yield on the 10-year Treasury note hit a new multiyear high Wednesday, topping 3.1 percent for the first time since July 8, 2011.

Also driving the dollar index higher was a drop in the Euro to a five-month low on concerns the political developments in Italy could cause wider disruptions in the common currency bloc.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Yesterday’s trade through 93.260 reaffirmed the uptrend. A move through 92.115 will change the main trend to down.

On the upside, buyers are facing resistance at a Fibonacci level at 93.349, the December 12 main top at 93.48 and yesterday’s high at 93.515. The latter is the trigger point for a possible surge into the November 14 main top at 93.87, followed by the November 7 main top at 94.42.

The new short-term range is 92.115 to 93.515. Its 50% level or pivot is 92.815. The next support area is a 50% level at 92.30, a main bottom at 92.115 and a Fibonacci level at 91.90.

Daily Swing Chart Technical Forecast

Based on the early trade, there seems to be a downside bias developing. Therefore, the tone of the market today is likely to be determined by trader reaction to the short-term pivot at 92.815.

Look for buyers to come in on the first test of 92.815. They will be defending the uptrend. If the move generates enough upside momentum then look for a retest of the cluster ranging from 93.35 to 93.52. This area could act as resistance on the first test, and as a trigger point for an acceleration to the upside on the next test.

Taking out 92.815 and sustaining the move will signal the presence of sellers. This could trigger an acceleration into 92.30, 92.115 and 91.90.