September U.S. Dollar Index futures are called steady-to-higher based on the pre-market trade. Volatility is low ahead of a key speech by Fed Governor Lael Brainard at 1700 GMT. She has been called the Fed’s most-noted dove, so investors are expecting her to send a signal that further tightening is coming perhaps as early as this month. The timing of her speech comes just before the Fed’s Open Market Committee blackout period. The central bank is scheduled to release its interest rate decision on September 21.
Helping to underpin the U.S. Dollar earlier in the session has been a sell-off in global bonds. This could be a sign that global investors are becoming convinced that the central banks have run out of monetary policy ammunition. Bonds have an inverse relationship to interest rates so they go down when yields go up.
The main trend is down according to the daily swing chart, but momentum shifted to up late last week with the formation of the closing price reversal bottom and main bottom at 94.44. A trade through 96.25 will turn the main trend to up.
The short-term range is 96.25 to 94.44. Its retracement zone at 95.345 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.
The main range is 97.62 to 94.05. Its retracement zone at 95.835 to 96.26 is the primary upside target.
Based on Friday’s close at 95.33, the direction of the index today is likely to be determined by trader reaction to the short-term 50% level at 95.345.
A sustained move over 95.345 will signal the presence of buyers. This could generate enough upside momentum to challenge the short-term Fibonacci level at 95.56. This level is a potential trigger point for an acceleration into 95.75 then 95.835.
A sustained move under 95.345 will indicate the presence of sellers. The next break could be labored because of angles at 95.25 and 95.11.
The daily chart opens up to the downside under 95.11 with the next major target angle coming in at 96.00.
WATCH THE PRICE ACTION AND READ THE ORDER FLOW AT 95.345 TODAY. TRADER REACTION TO THIS LEVEL WILL DETERMINE THE DIRECTION OF THE SEPTEMBER U.S. DOLLAR INDEX TODAY.