US Dollar Index (DX) Futures Technical Analysis – Shorts Are Covering Ahead of Fed Decisions

September U.S. Dollar Index futures posted an outside move and for the second straight day, a closing price reversal bottom. The volatile price action is the result of low volume and uncertainty ahead of the start of the two-day U.S. Federal Reserve Monetary Policy meeting.

Shorts also squared positions on the chance that President Trump still had time to push through his expansionary fiscal agenda. This after the U.S. Senate passed a motion to proceed on a repeal of the 2010 Affordable Care Act, which Trump and Republicans have vowed to undo.

Technical Analysis

The main trend is down according to the daily swing chart. Early in the session, sellers took out yesterday’s low and closing price reversal bottom at 93.65, only to form another closing price reversal bottom at 93.46. A trade through 93.96 will confirm the chart pattern.

The main range is 95.96 to 93.46. Its retracement zone is 94.71 to 95.00 is the primary upside target. However, the index is not likely to reach this zone unless there is news that triggers a massive short-covering rally.

The index also straddled the August 18, 2016 bottom at 93.58 for a second day. Holding above this level will indicate the selling is getting weaker and the buying is getting stronger.

A sustained move under 93.58 will signal the presence of sellers. This could drive the index into a steep downtrending angle at 93.46. Crossing to the weak side of this angle will put the index in a bearish position. This could lead to an eventual move into the June 23, 2016 main bottom at 92.555.