US Dollar Index (DX) Futures Technical Analysis – Trader Reaction to Gann Angle at 91.81 Will Determine Direction This Week

The U.S. Dollar closed lower against a basket of currencies last week. The low was hit early in the week with the index consolidating the rest of the week on the back of hawkish U.S. Federal Reserve minutes and upbeat U.S. economic data.

Traders came in selling at the start of the new year on bets the Fed would have trouble raising interest rates the three times it forecast in December.  The Fed minutes showed some members were concerned about low inflation. Additionally, it showed Fed officials thought the tax reform plan could boost economic growth.

On Friday, U.S. Non-Farm Payrolls came in below expectations, but traders felt the number was not weak enough to derail the Fed’s plan to raise rates at least three times in 2018.

March U.S. Dollar Index futures settled last week at 91.673, down 0.153 or -0.17%.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. If the downside momentum continues then we could see a move into the September bottom at 90.68. Overcoming the previous bottom at 92.13 will indicate the selling is getting weaker or the buying is getting stronger. However, the trend won’t change to up unless buyers can take out 93.825.

The main range is 90.68 to 94.76. Its retracement zone is 92.72 to 92.24. Trading below this retracement zone is helping with the downside bias. This zone is essentially controlling the near-term direction of the index.

Weekly Technical Forecast

Based on last week’s close at 91.673, the direction of the dollar index this week will be determined by trader reaction to the uptrending Gann angle at 91.81.

A sustained move under 91.81 will indicate the presence of sellers. This could lead to further downside pressure with the next target angle coming in at 91.24. This is the last potential support angle before the 90.68 main bottom.

Overtaking and sustaining a rally over 91.81 will signal the presence of buyers. If volume is behind the move, we could see a surge into the Fib level at 92.24, followed by the downtrending Gann angle at 92.51.