US Dollar Index (DX) Futures Technical Analysis – September 18, 2017 Forecast

Daily December U.S. Dollar Index futures are trading higher on Monday. The market is also trading inside Friday’s range which indicates investor indecision and impending volatility.

The index is being driven higher by a rally in the USD/JPY to an eight-week high. The U.S. Dollar is also being supported by a rise in U.S. Treasury yields, as traders eyed the start of a two-day meeting by the U.S. Federal Reserve.

The focus for this week is the Fed’s September 19-20 policy meeting. The Fed is expected to announce a plan to start trimming its balance sheet at the meeting, but is widely expected to keep interest rates unchanged-for now.

Investors are now pricing in a more than 50 percent chance of a Fed hike by the end of the year, up from only around 40 percent chance less than a week ago, according to CME FedWatch.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.42 will change the minor trend to up.

The main range is 93.84 to 90.795. Its retracement zone at 93.32 to 92.68 stopped the rally last week at 92.42.

The short-term range is 90.795 to 92.42. Its retracement zone is 91.61 to 91.42. This zone was tested successfully on Friday.

This retracement zone is very important. Aggressive counter-trend buyers are trying to form a potentially bullish secondary higher bottom. Trend traders are trying to drive the market through the zone in an effort to make 92.42 a new main top.

Daily Forecast

Based on the current price at 91.745 and the earlier price action, the direction of the dollar index today is likely to be determined by trader reaction to the short-term 50% level at 91.61.

A sustained rally over 91.61 will indicate the presence of buyers. Volume is low, but if this creates enough upside momentum, we could see a rally into a cluster of numbers at 92.30, 92.32 and 92.40.

A sustained move under 91.61 will signal the presence of sellers. The first target angle comes in at 91.55. This is followed by the Fibonacci level at 91.42. The daily chart opens up to the downside under 91.42 with the next target angle coming in at 91.17.

Look for a bullish tone on a sustained move over 91.61 and a bearish tone on a sustained move under 91.42.