US Dollar Index (DX) Futures Technical Analysis – Trend Changes to Up on Trade Through 90.025

The U.S. Dollar surged against a basket of major currencies for a second day on Tuesday. The strong close put the Greenback in a position to challenge its last main top from March 20.

The June U.S. Dollar Index settled at 89.765, up .782 or +0.88%.

The rally was primarily driven by end of the month and end of the quarter position squaring. Traders ignored a drop in U.S. Treasury yields that tends to make the dollar a less-attractive investment and another steep sell-off in U.S. equity markets that normally drives investors into safe-haven assets.

The Dollar posted its biggest gain against the Japanese Yen, closing up 1.45%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher due to Tuesday’s closing price reversal bottom and Wednesday’s subsequent confirmation.

A trade through 90.025 will change the main trend to up. If this move generates enough upside momentum then look for the rally to eventually extend into the next main top at 90.490.

A move through 88.530 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The major 50% and 61.8% support is 89.16 to 88.85.

The main range is 90.49 to 88.53. Its retracement zone at 89.51 to 89.74 was straddled on Wednesday.

The short-term range is 90.025 to 88.53. Its retracement zone at 89.29 to 89.45 was also straddled and exceeded. This area is new support.

Daily Swing Chart Technical Forecast

Based on Wednesday’s close at 89.765, the direction of the index today is likely to be determined by trader reaction to the Fibonacci level at 89.74.

A sustained move over 89.74 will indicate the presence of buyers. This could create the upside momentum needed to challenge the next main top at 90.025. This is also the trigger point for an acceleration to the upside with 90.49 the next major upside target.

A sustained move under 89.74 will signal the presence of sellers. If the selling pressure is strong enough then look for a pullback into a possible support cluster at 89.51 to 89.45.

The daily chart opens up under 89.45 with the next two potential targets coming in at 89.28 then 89.16.