US Dollar Index

U.S. Dollar Index (DX) Futures Technical Analysis – Dollar Firms after Fed Takes Aggressive Action to Rein in Inflation

The U.S. Dollar is trading slightly lower shortly after the U.S. Federal Reserve raised its benchmark interest rate 75 basis points as expected. The move is being fueled by a dip in Treasury yields. Despite the late session weakness, the index remains just under its multi-year high at 105.475.

At 18:12 GMT, September U.S. Dollar Index futures are trading 105.200, down 0.142 or -0.13%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.18, up $0.02 or +0.07%.

Fed Raises Benchmark 75 Basis Points

The Federal Open Market Committee (FOMC) concluded its two-day meeting on Wednesday, and as expected, took aggressive action on interest rates in a bid to rein in inflation.

Ending weeks of speculation, the FOMC took the level of its benchmark funds rate to a range of 1.5%-1.75%, the highest since just before the COVID pandemic began in March 2020.

Furthermore, members indicated a much stronger path of rate increases ahead to arrest inflation moving at its fastest pace going back to December 1981. Policymakers now see the year ending with its benchmark rate at 3.4%.

Finally, Officials also significantly cut their outlook for 2022 economic growth, now anticipating just a 1.7% gain in GDP, down from 2.8% from March.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 105.475 will signal a resumption of the uptrend. A move through 101.445 will change the main trend to down.

The minor trend is also up. A trade through 102.005 will shift momentum to the downside.

Based on the minor range of 101.170 to 105.475, its retracement zone at 103.320 – 102.815 is the next potential downside target.

Daily Swing Chart Technical Forecast

Trader reaction to 104.980 is likely to determine the direction of the September U.S. Dollar Index into the close on Wednesday.

Bullish Scenario

A sustained move over 104.980 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into 105.475. This price is a potential trigger point for an acceleration into the long-term Fibonacci level at 107.780.

Bearish Scenario

A sustained move under 104.980 will indicate the presence of sellers. Taking out 104.480 will be a sign of increasing selling pressure. This could trigger an acceleration into 103.320 – 102.815 over the short-term.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.