US Dollar Index (DX) Futures Technical Analysis – Rally Capped by Rising Safe-Haven Currencies

September U.S. Dollar Index futures were under pressure on Thursday as investors continued to react to the escalating situation between the United States and North Korea. After North Korea hinted at developing a plan to attack Guam, a U.S. Pacific territory, President Trump fired back by stating that his warning to bring “fire and fury” on North Korea may not have been tough enough. This statement helped push the dollar from its highs.

Keep in mind that there is the “U.S. Dollar” and there is the “U.S. Dollar Index”. Flight to safety buying is driving up the Japanese Yen and Swiss Franc against the U.S. Dollar. These are considered safe-haven assets.

The U.S. Dollar is trading flat against the Euro. This is significant because it is 57% of the U.S. Dollar Index. The U.S. Dollar is trading higher against the New Zealand Dollar.

Basically, during the current turmoil, you have to watch what you’re trading and don’t just buy and sell indiscriminately.

Technically, the main trend is down according to the daily swing chart. Sellers are responding to yesterday’s potentially bearish closing price reversal top. A trade through 93.785 will negate that chart pattern. A move through 94.115 will change the main trend to up.

Looking at the chart pattern, I’m not sure the September U.S. Dollar Index is in a position to “crash”. In this case, “crash” means taking out last week’s low at 92.39 in one fell swoop.

Because of the way the risk is being spread about, the next sell-off could be labored because of a series of retracement levels at 93.46, 93.25, 93.09 and 92.92.

If sellers can take out 92.92 with conviction then look for the pressure to increase all the way down to 92.55 and 92.39.