US Dollar Index (DX) Futures Technical Analysis – September 28, 2016 Forecast

December U.S. Dollar Index futures are trading higher shortly before the regular session opening. Short-covering before today’s U.S. Durable Goods report and a handful of Fed speakers is helping to buoy the index. The Forex markets are mixed with the commodity-linked Australian, New Zealand and Canadian Dollars trading lower. The funding currencies – Japanese Yen and Euro – are also lower. With the Euro feeling heat because of a steep drop in the shares of Deutsche Bank, Germany’s largest lender. Its shares fell to a record low on concern about a $14 billion demand from the U.S. Department of Justice.

Following the durable goods report at 1230 GMT, Yellen is scheduled to testify at 1400 GMT, followed by FOMC Member James Bullard at 1410 GMT. European Central Bank President will also deliver a speech at 1430 GMT. The day wraps up with a late speech by FOMC Member Esther George at 2315 GMT on Wednesday.

Investors want to know Yellen’s views after the split FOMC vote on September 21 and get a feeling as to how close the Fed is to raising rates in December.

Several Fed speakers are also on tap to deliver their messages.  FOMC voters Mester (hawk, dissenter), George (hawk, dissenter), and James Bullard are all capable of moving the markets with their commentary. Traders should be looking for increased volatility especially if the Fed members comment on the timing of the next rate hike.

Hawkish talk should be bullish for the U.S. Dollar. Dovish talk bearish.

TECHNICAL ANALYSIS

The main trend is down according to the daily swing chart, but momentum is starting to creep higher. The main trend will turn up on a trade through the 96.305 main top. A move through 94.95 will signal a resumption of the minor downtrend.

The main range is 94.385 to 96.305. Its retracement zone at 95.345 to 95.12 is the best support zone and primary downside target. This zone has provided support four out of the last five days.

The short-term range is 96.305 to 94.95. Its retracement zone at 95.63 to 95.79 is the primary upside target. Its lower or 50% level at 95.63 provided resistance earlier today. This zone is important because sellers are going to try to produce a potentially bearish secondary lower top. Buyers are going to try to drive through this zone in an effort to make 94.95 a new secondary higher bottom.

FORECAST

BASED ON THE CURRENT PRICE AT 95.475 AND THE EARLIER PRICE ACTION, THE DIRECTION OF THE MARKET TODAY IS LIKELY TO BE DETERMINED BY TRADER REACTION TO THE SHORT-TERM 50% LEVEL AT 95.63.

TAKING OUT 95.63 WILL INDICATE THE BUYING IS GETTING STRONGER. THE FIRST TARGET IS A DOWNTRENDING ANGLE AT 95.68. THIS IS FOLLOWED BY THE SHORT-TERM FIBONACCI LEVEL AT 95.79. THIS PRICE IS THE TRIGGER POINT FOR AN ACCELERATION INTO THE NEXT DOWNTRENDING ANGLE AT 95.99.

A SUSTAINED MOVE UNDER 95.63 WILL SIGNAL THE PRESENCE OF SELLERS. THE FIRST DOWNSIDE TARGET IS THE MAIN 50% LEVEL AT 95.345. THIS IS FOLLOWED BY AN UPTRENDING ANGLE AT 95.26 AND THE MAIN FIBONACCI LEVEL AT 95.12.

THE DAILY CHART OPENS UP TO THE DOWNSIDE UNDER 95.12 WITH THE NEXT MAJOR TARGET ANGLE COMING IN AT 94.82.

ANOTHER WAY TO LOOK AT THE INDEX, IT IS TRAPPED BETWEEN TWO 50% LEVELS. LOOK FOR A STRONG UPSIDE BIAS TO DEVELOP IF 95.63 IS TAKEN OUT WITH CONVICTION. A STRONG DOWNSIDE BIAS COULD DEVELOP ON A SUSTAINED MOVE UNDER 95.345.