US Dollar Index (DX) Futures Technical Analysis – September 25, 2017 Forecast

December U.S. Dollar Index futures gapped higher on the opening in response to a weaker Euro. The single-currency retreated in early Asian trading on Monday after Germany’s election showed surging support for a far-right party that is going to force Chancellor Angela Merkel to form a governing coalition.

The Japanese Yen also weakened against the dollar helped by renewed hope for Prime Minister Shinzo Abe’s economic stimulus as he is expected to announce a snap election, to be held on October 22.

Later today, investors will get the opportunity to react to several Fed speakers including FOMC Members William Dudley, Charles Evans, and Neel Kashkari. Their speeches could cause volatility in the market especially if they talk about monetary policy and the timing of the next rate hike.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend turned up last week when buyers took out the swing top at 92.42. There wasn’t much of a follow-through to the upside because the move was all short-covering. Prices may retreat in order to allow buyers to enter at more favorable price levels rather than chase the market higher.

A trade through 91.215 will negate a reversal bottom and also change the main trend to down with 90.795 the next likely target.

The main range is 93.84 to 90.795. Its retracement zone is 93.32 to 92.68. This zone stopped the rally at 92.495 last week. It is controlling the longer-term direction of the market.

The short-term range is 90.795 to 92.495. Its retracement zone at 91.645 to 91.44 stopped the selling on Friday at 91.575. This zone is important because buyers are going to try to form a potentially bullish secondary higher bottom.

Daily Forecast

Based on the current price at 92.015 (0505 GMT) and the earlier price action, the direction of the market today is likely to be determined by trader reaction to an uptrending angle at 92.17 and a downtrending angle at 92.09.

A sustained move under 92.09 will signal the presence of sellers. The daily chart is wide open to the downside so if momentum builds, we could see a move into 91.645, 91.48 and 91.44.

A sustained move over 92.17 will indicate the presence of buyers. This could trigger a rally into the main 50% level at 92.325. If the buying increases then look for the rally to extend into 92.495 then the main Fibonacci level at 92.68. This is a trigger point for an acceleration into a downtrending angle at 92.91.

Look for a bearish tone to develop today on a sustained move under 92.09 and for a bullish tone to develop on a sustained move over 92.17.