US Dollar Index (DX) Futures Technical Analysis – Trend Down with 88.07 Next Major Target

The combination of a stronger Euro and negative comments by Treasury Secretary Steven Mnuchin drove the U.S. Dollar lower against a basket of currencies on Wednesday. The dollar fell nearly 1 percent, in its biggest drop in 10 months, after Mnuchin’s comments on Wednesday.

Mnuchin was quoted as saying that the weak dollar is good for U.S. trade, in a briefing with reporters at the World Economic Forum in Davos, Switzerland. That comment rattled Forex traders, fueling a steep by the U.S. Dollar to its lowest level in three years.

Daily Swing Chart Analysis

The main trend is down according to the daily swing chart. A trade through 88.955 will signal a resumption of the downtrend. The main target is the December 16, 2014 bottom at 88.067.

March U.S. Dollar Index futures are in the window of time for a potentially bullish closing price reversal bottom, but the trend won’t change to up unless 90.765 is taken out.

Additional upside targets are a pair of old bottoms at 90.68 and 91.00.

Daily Swing Chart Forecast

The momentum is clearly to the downside, but Wednesday’s weakness was triggered by unexpected negative comments from Mnuchin.

The dollar index could snap back on short-covering on Thursday because Mnuchin was apparently quoted out of context and may clarify his position on the Greenback.

On Thursday, traders will get an opportunity to react to the European Central Bank’s monetary policy decision and press conference from ECB President Mario Draghi. If the upside momentum continues in the Euro due to hawkish language from the central bank, the March U.S. Dollar Index futures contract will continue to fall.