U.S. Dollar Index (DX) Futures Technical Analysis – Testing Retracement Zone Support at 105.155 to 104.215

The U.S. Dollar tumbled on Wednesday after signs of sharply decelerating U.S. inflation prompted bets that the Federal Reserve would raise interest rates at a slower pace than previously expected.

Treasury yields mostly pulled back from an earlier plunge as investors digested data showing that consumer prices did not rise in July as the cost of gasoline fell, delivering the first notable sign of relief for Americans who have watched inflation soar over the past two years, Reuters wrote.

At the end of the session, traders had priced in a 57.5% chance of a 50 basis point rate hike next month, and a 42.5% chance of a 75 basis point rate hike. Before the inflation report, traders had priced in a 64.5% chance of a super-sized 75 basis point rate hike.

On Wednesday, September U.S. Dollar Index futures settled at 105.080, down 1.1720 or -1.12%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $28.13, down $0.30 or -1.07%.

Hawkish Fed Officials Stop Price Slide

Following a test of its lowest level since July 1 at 104.515, the dollar index bounced back into the close after a couple of Fed officials spoke of the need to continue to raise interest rates.

Minneapolis Fed Bank President Neel Kashkari said that he continues to believe that the U.S central bank will need to raise its policy rate to 3.9% by year-end to 4.4% by the end of 2023 to fight inflation.

Chicago Fed President Charles Evans remained more hawkish than financial markets, expecting that U.S. rates will top out at 4% next year.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 104.515 will re-establish the downtrend. A move through 106.810 will change the main trend to up.

The main range is 101.170 to 109.140. The market is currently testing its retracement zone at 105.155 to 104.215. This zone may have stopped the selling at 104.515 on Wednesday.

The intermediate range is 103.200 to 109.140. The index is trading below its retracement zone at 105.480 to 106.181, making it resistance.

The short-term range is 109.140 to 104.515. Its 50% level at 106.830 is additional resistance.

Short-Term Outlook

Trader reaction to the main 50% level at 105.155 is likely to determine the direction of the September U.S. Dollar Index early Thursday.

Bullish Scenario

A sustained move over 105.155 will indicate the presence of buyers. The first upside target is 105.480. Overcoming this level could trigger an acceleration into 106.180.

Bearish Scenario

A sustained move under 105.155 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into Wednesday’s low at 104.515, followed by the main Fibonacci level at 104.215. This price is a potential trigger point for an acceleration to the downside.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Ripe for Rebound Rally Following Test of Key Support Area

The U.S. Dollar is inching lower against a basket of major currencies on Tuesday, but off its lows in an early sign that the recent selling pressure may be subsiding. The reasons behind the slowdown in the selling pressure may be technical factors or the start of position-squaring ahead of Friday’s U.S. Non-Farm Payrolls report.

Worries about the Euro Zone economy are pressuring the Euro against the U.S. Dollar. Lower oil prices are weighing on the commodity-sensitive Canadian Dollar. Gains are being limited, however, by a rise in the Japanese Yen due to falling Treasury yields.

At 06:59 GMT, September U.S. Dollar Index futures are trading 105.290, down 0.046 or -0.04%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.18, down $0.11 or -0.39%.

Earlier in the session, the U.S. Dollar Index hit its lowest level since July 5 while testing a key retracement zone that some traders may perceive as a value area. Longer-term traders may view this as a buying opportunity with limited downside.

Play for Recession or Additional Rate Hikes?

Although the U.S. Dollar is down from its multi-year high set at 109.140 on July 14, it’s back to where it was prior to the last U.S. Consumer Price Index (CPI) report. If you recall, the dollar index shot to its high after strong inflation data drove up expectations for a 100 basis point rate hike by the Fed at its July meeting.

The index began to fall after Fed policymakers downplayed the need for a full-point interest rate hike. It fell further after Fed chair Powell suggested the need for the Fed to remain flexible and U.S. economic data indicated a weakening economy.

So what does an investor do? Bet on a recession and a slower pace of rate hikes, or additional Fed rate hikes to drive down inflation?

In my opinion, the Fed is going to keep raising rates until inflation gets to the mandated 2% level. It can’t afford not to. However, it is going to be more flexible as far as the size and the timing of future rate hikes are concerned.

This doesn’t sound bearish to me. Driving the dollar to a multi-year high because speculators thought a full-basis point rate hike was needed was too bullish. But the current correction isn’t too bearish, it was necessary.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 103.200 will change the main trend to down. A move through 109.140 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 107.300 will change the minor trend to up.

The main range is 101.170 to 109.140. Its retracement zone at 105.155 to 104.215 is potential support. The index tested this zone at 104.920 earlier today.

The short-term range is 103.200 to 109.140. Its retracement zone at 105.470 to 106.170 is potential resistance.

Daily Swing Chart Technical Forecast

Trader reaction to 105.155 and 105.470 is likely to determine the direction of the September U.S. Dollar Index on Tuesday.

Bearish Scenario

A sustained move under 105.155 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 104.215.

Bullish Scenario

A sustained move over 105.470 will signal the presence of buyers. If this generate enough upside momentum then look for a surge into the 50% level at 106.170.

Side Notes

A close over 105.340 will form a potentially bullish closing price reversal top. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day correction.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 105.470, Weakens Under 105.155

The U.S. Dollar is trading lower against a basket of major currencies on Monday after hitting its lowest level since July 5 earlier in the session. The price action suggests investors are ramping up bets that aggressive Federal Reserve monetary policy would tip the economy into a recession.

The selling pressure began last Wednesday, shortly after the Fed announced a 75 basis point rate hike as widely expected. Dovishly-perceived comments from Fed Chairman Jerome Powell also contributed to the weakness. The selling pressure intensified on Thursday and into the weekend after the latest U.S. Gross Domestic Product (GDP) report showed a second-quarter contraction.

At 13:05 GMT, September U.S. Dollar Index futures are trading 105.480, down 0.299 or -0.28%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.30, down $0.10 or -0.37%.

US Manufacturing PMI Report Could Set the Tone

Today’s U.S. Manufacturing PMI report, due to be released at 14:00 GMT, is expected to show a dip from 53.0 to 52.3.

A report that shows activity slowed more than expected in July will serve as another sign that the economy was cooling amid aggressive monetary policy tightening by the Federal Reserve. This would put pressure on Treasury yields and the U.S. Dollar against its peers.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 103.200 will change the main trend to down. A move through 109.140 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 107.300 will change the minor trend to up.

The intermediate range is 101.170 to 109.140. Its retracement zone at 105.155 to 104.215 is the primary downside target zone.

The short-term range is 103.200 to 109.140. The market is currently trading on the weak side of its retracement zone at 105.470 to 106.170, making it resistance.

The combination of the two zones makes 105.155 to 105.470 an important area to watch for potential support.

Daily Swing Chart Technical Forecast

Trader reaction to 105.470 and 105.155 is likely to determine the direction of the September U.S. Dollar Index on Monday.

Bullish Scenario

A sustained move over 105.470 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the 50% level at 106.170.

Bearish Scenario

A sustained move under 105.155 will signal the presence of sellers. This is a potential trigger point for an acceleration into the intermediate Fibonacci level at 104.215.

Side Notes

Following the prolonged move down, a close over 105.780 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a 2 to 3 day rally.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Test of 105.470 – 105.155 Could Attract New Buyers

The U.S. Dollar is trading lower against a basket of major currencies early Friday as traders continued to react to data showing the U.S. economy contracted again in the second quarter, fueling speculation that the Federal Reserve will not raise rates as aggressively as previously expected.

At 03:45 GMT, the September U.S. Dollar Index is trading 105.935, down 0.301 or -0.28%. On Thursday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.39, down $0.03 or -0.11%.

The biggest drag on the index is the Japanese Yen, which jumped to a six-week low earlier in the session. On Thursday, the greenback posted its largest daily percentage fall against the Yen since mid-March 2020.

Also pressuring the U.S. Dollar was a drop in U.S. Treasury yields to their lowest level in three weeks. From its peak on Wednesday, the two year yields has declined by 24 basis points.

Thursday Recap

On the economic front, data showed on Thursday that gross domestic product fell at a 0.9% annualized rate in the second quarter. Consumer spending grew at its slowest pace in two years and business spending contracted, raising the risk that the economy was on the cusp of a recession. Economists polled by Reuters had forecast GDP rebounding at a 0.5% rate.

Looking Ahead…

On Friday U.S. Dollar Index investors will get the opportunity to react to a boatload of U.S. economic reports at 12:30 GMT including, Core PCE Price Index, Employment Cost Index, Personal Income and Personal Spending. At 13:45 a report on Chicago PMI will be released. This will be followed by reports on revised UoM Consumer Sentiment and UoM Inflation Expectations.

Evidence of growth could be supportive for the U.S. Dollar. Signs of weakness could help extend the current sell-off.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 109.140 will reaffirm the uptrend. A move through 103.200 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through 107.300 will change the minor trend to up and shift momentum to the upside.

The short-term range is 103.200 to 109.140. The index is currently testing its retracement zone at 106.170 to 105.470.

The intermediate range is 101.170 to 109.140. Its retracement zone at 105.155 to 104.215 is the key area controlling the near-term direction of the index.

The combination of these two areas makes 105.470 to 105.155 a key support cluster.

On the upside, resistance is a major Fibonacci level at 107.70.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 106.170 is likely to determine the direction of the September U.S. Dollar Index on Friday.

Bearish Scenario

A sustained move under 106.170 will indicate the presence of sellers. This could drive the index into the support cluster at 105.470 to 105.155. Look for buyers on the first test of this zone. If 105.155 fails as support then look for the selling to possibly extend into 104.215.

Bullish Scenario

A sustained move over 106.170 will signal the presence of buyers. This could trigger a surge into a minor pivot at 106.645, followed by the minor top at 107.300.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Advance GDP Reading Sets the Tone

The U.S. Dollar is trading lower against a basket of major currencies on Thursday, nearing a one-week low, after Federal Reserve Chair Jerome Powell soothed investor worries about continued aggressive rate hikes.

At 04:18 GMT, September U.S. Dollar Index futures are trading 106.155, down 0.176 or -0.17%. On Wednesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.42, down $0.24 or -0.84%.

Dovish Powell Sinks Demand for Greenback

After early session strength, the dollar starting sinking after the Fed raised the benchmark rate by an as-expected 75 basis points to bring it closer to neutral, while noting that although the labor market remains strong, other economic indicators have softened.

The index slid even further after Federal Reserve Chairman Powell said that based on the strength of employment, he didn’t believe the economy was in recession, and that a recession was not necessarily required to tame super-heated inflation.

The price action suggests U.S. Dollar investors were probably betting on hawkish comments from Powell and were disappointed when he leaned the other way. Additionally, the rise in U.S. stock markets led to a shift in investor sentiment, which likely led investors who bought the safe-haven dollar for protection to reduce positions.

Focus Shifts to US Advance GDP

Traders will get the opportunity to react to third quarter advance GDP at 12:30 GMT. The report is expected to show the economy grew by 0.4%, up from the previously released 1.6%.

A higher than expected reading could give the dollar a boost because it will mean the Fed has room to raise rates further. A lower than expected reading could drive the dollar lower since it could encourage the Fed to reduce the size and pace of rate hikes.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through 109.140 will signal a resumption of the uptrend. A move through 103.200 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through 105.900 will indicate the selling pressure is getting stronger. A move through 107.300 will change the minor trend to up.

The short-term range is 103.200 to 109.140. The market is currently testing its retracement zone at 106.170 to 105.470.

On the upside is minor resistance at 106.645 and a long-term Fibonacci level at 107.780.

On the downside, the key support is a price cluster at 105.470 to 105.155, followed by a Fibonacci level at 104.215.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at 106.170 is likely to determine the direction of the September U.S. Dollar Index early Thursday.

Bullish Scenario

A sustained move over 106.170 will indicate the presence of buyers. Overtaking the minor pivot at 106.645 will indicate the buying is getting stronger. This could trigger a surge into the minor top at 107.300, followed by the Fib level at 107.780.

Bearish Scenario

A sustained move under 106.170 will signal the presence of sellers. Taking out 105.99 will indicate the selling pressure is getting stronger. This could trigger a break into the 105.470 to 105.155 support cluster.

Side Notes

Since the main trend is up, look for buyers on a pullback into 105.470 to 105.155.

U.S. Dollar Index (DX) Futures Technical Analysis – Bulls Hoping for Break into 105.470 – 105.155 Value Zone

The U.S. Dollar is trading lower against a basket of major currencies on Monday as traders position-themselves ahead of the start of the Federal Reserve’s two-day monetary policy meeting.

The dollar is being pressured by a stronger Euro and safe-haven liquidation amid improving risk sentiment. However, gains are likely being limited by slightly higher U.S. Treasury yields.

At 12:21 GMT, September U.S. Dollar Index futures are trading 106.225, down 0.396 or -0.37%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.48, down $0.04 or -0.16%.

Traders Bracing for Federal Reserve Interest Rate Decision

This week’s focus will be on the U.S. Federal Reserve’s two-day policy meeting, concluding on Wednesday, with economists broadly expecting a 75 basis point hike to interest rates.

The Fed is attempting to reel in inflation while navigating a backdrop of slowing growth, as evidenced by a slew of weaker-than-expected data on business activity and jobs published last week.

Treasury Secretary Janet Yellen told NBC on Sunday that while there are signs that the U.S. economy is at risk of recession, a downturn is not inevitable.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through 109.140 will signal a resumption of the uptrend. A move through 103.200 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through 105.990 will reaffirm the downtrend. A move through 107.250 will change the minor trend to up.

The short-term range is 103.200 to 109.140. The index is currently testing its retracement zone at 106.170 to 105.470.

The main range is 101.170 to 109.140. Its retracement zone at 105.155 to 104.215 is the major support.

The two retracement zones combine to form a support cluster at 105.470 to 105.155. Since the main trend is up, buyers are likely to come in on a test of this zone.

On the upside, the major resistance is a long-term Fibonacci level at 107.780.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 106.170 is likely to determine the direction of the September U.S. Dollar Index on Monday.

Bullish Scenario

A sustained move over 106.170 will indicate the presence of buyers. The first upside target is a minor pivot at 106.620. Overtaking this level could drive the index into the minor top at 107.250.

Bearish Scenario

A sustained move under 106.170 will signal the presence of sellers. Taking out last week’s low at 105.990 could trigger an acceleration into the support cluster at 105.470 to 105.155.

Since the main trend is up, watch for buyers to come in on a test of 105.470 to 105.155. If the latter fails to hold then look for the selling to possibly extend into the main Fibonacci level at 104.215. This is the last major support level before the 103.200 main bottom.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 106.740 Sets the Early Tone

The U.S. Dollar closed lower against a basket of currencies on Thursday and is on course to finish over 1% lower for the week, putting it in a position to post its first weekly loss in four weeks.

The greenback was under pressure throughout the session after the European Central Bank (ECB) announced its decision to raise its benchmark interest rate by 50 basis points, its first rate hike in over 10-years.

On Thursday, the September U.S. Dollar Index settled at 106.804, down 0.1490 or -0.14%. Additionally, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) closed at $28.52, down $0.08 or -0.28%.

US Economic Data Fails to Impress

In U.S. economic news, data from the Labor Department showed initial jobless claims crept up to 251,000 in the week-ended July 16, an increase of 7,000 from the previous week’s unrevised level of 244,000. The uptick was a surprise to economists, who were looking for unemployment claims to edge down to 240,000.

A separate reported released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly contracted at a faster rate in the month of July.

The Philly Fed report showed its current general activity index fell to a negative 12.3 in July from a negative 3.3 in June, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to rebound to a positive 0.4.

The Conference Board also released data showing its index of leading economic indicators slumped for the fourth straight month in June. The report showed the CB’s leading economic index decreased by 0.8% in June after falling by a revised 0.6% in May.

Economists were looking for the leading economic index to decline by 0.5% compared to the 0.4% drop originally reported the previous month.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 103.200 will change the main trend to down. A move through 109.140 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 106.230 will indicate the selling pressure is getting stronger.

On the downside, the support is the short-term retracement zone at 106.170 to 105.470. This is followed by the main retracement zone at 105.155 to 104.215.

The two zones combine to form a support luster at 105.470 to 105.155.

On the upside, resistance is the long-term Fibonacci level at 107.780.

Daily Swing Chart Technical Forecast

Trader reaction to 106.740 is likely to determine the direction of the September U.S. Dollar Index early Friday.

Bullish Scenario

A sustained move over 106.740 will indicate the presence of buyers. Look for a near-term surge into the long-term Fibonacci level at 107.780 if this move is able to generate enough upside momentum

Bearish Scenario

A sustained move under 106.740 will signal the presence of sellers. Look for a test of 106.230, followed by thee 50% level at 106.170 if this move creates enough downside momentum

Taking out 106.170 could trigger a sharp break into the support cluster at 105.470 to 105.155.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Steep Break Puts 105.470 – 105.155 Value Zone on Radar

The U.S. Dollar is down sharply against a basket of major currencies at the mid-session on Tuesday amid expectations the Federal Reserve will be less aggressive at its upcoming meeting later this month. The index was also pressured as the Euro rose sharply, following reports that European Central Bank (ECB) policymakers are likely to discuss raising rates by 50 basis points when they meet on Thursday.

At 16:35 GMT, September U.S. Dollar Index futures are trading 106.505, down 0.725 or -0.68%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.48, down $0.22 or -0.77%.

Reuters reported that ECB officials are considering a rate hike of 50 basis points on Thursday, instead of a 25-basis point move previously suggested by them.

In U.S. economic news, new U.S. home-building activity fell to a nine-month low in June and permits for new construction projects slipped as well, the latest indication of a cooling housing market as surging mortgage rates reduce affordability.

Housing starts fell to a seasonally adjusted annual rate of 1.559 million units last month, the lowest level since September 2021, the Commerce Department said on Tuesday. Building permits for single-family homes – an indicator of future construction – declined 8% to a rate of 967,000 units, the lowest since June 2020.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending lower. A trade through 109.140 will signal a resumption of the uptrend. A move through 103.200 will change the main trend to down.

The minor trend is down. It turned down on Monday when sellers took out 107.270. This move shifted momentum to the downside.

The short-term range is 103.200 to 109.140. Its retracement zone at 106.170 to 105.470 is the next downside target and potential support area.

The intermediate range is 101.170 to 109.140. Its retracement zone at 105.155 to 104.215 is a more important support area.

The two retracement zones combine to form a support cluster at 105.470 to 105.155. Since the main trend is up, look for buyers to come in on a test of this area.

On the upside, the resistance is a long-term Fibonacci level at 107.780.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 106.170 is likely to determine the direction of the September U.S. Dollar Index into the close on Tuesday.

Bullish Scenario

A sustained move over 106.170 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the long-term Fibonacci level at 107.780.

Bearish Scenario

A sustained move under 106.170 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the support cluster at 105.470 to 105.155. Look for buyers on the first test of this area.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Rally Suggests Investors Placing Bets on Hot CPI Read

The U.S. Dollar is edging higher against a basket of major currencies on Monday, attempting to claw back the previous session’s decline. Traders are eyeing Wednesday’s U.S. Consumer Price Index (CPI) as this week’s major market moving event. However, global investors also put Chinese data and European energy security at the top of their lists that could drive relentless volatility.

At 06:13 GMT, September U.S. Dollar Index futures are trading 107.155, up 0.334 or +0.31%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.57, down $0.02 or -0.07%.

The greenback reversed course on Friday following the release of a stronger-than-expected U.S. Non-Farm Payrolls report that eased concerns about a U.S. recession, but did little to dampen the chances of a 75-basis point rate hike by the Fed on July 27.

However, Wednesday’s CPI report could put the bull market back on track if it comes in hotter-than-expected. A high reading would greenlight the Fed to continue to raise rates at a 50 to 75 basis point clip, perhaps even into September.

The index could also get a boost from another plunge in the heavily-weighted Euro. The single-currency is struggling against the greenback due to energy concerns, which are likely to hamper the European Central Bank’s ability to raise interest rates aggressively to combat rising inflation.

Daily September U.S. Dollar Index

Short-Term Outlook

Trader reaction to 107.128 is likely to determine the direction of the September U.S. Dollar Index on Monday.

Bullish Scenario

A sustained move over 107.128 will indicate the presence of buyers. If this creates enough upside momentum then look for an intraday surge into last Friday’s closing price reversal top at 107.615.

Taking out 107.615 will signal a resumption of the uptrend with a long-term Fibonacci level at 107.780 the next likely upside target. Counter-trend traders could come in on the first test of this level, but overcoming it could trigger an acceleration to the upside with no target in sight.

Bearish Scenario

A sustained move under 107.128 will signal the presence of sellers. Taking out Friday’s low at 106.640 will confirm the closing price reversal top. This won’t change the trend. But it could trigger the start of a 2 to 3 day correction. The target being the short-term retracement zone at 105.408 to 104.887 the next major target area.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Giving Up Gains as Recession Fears Ease

The U.S. Dollar is trading lower against a basket of major currencies late Friday after erasing all of its earlier gains. The catalyst behind the selling pressure is a stronger-than-expected U.S. Non-Farm Payrolls report for June.

Although the report did nothing to reduce the chances of more aggressive interest rate hikes by the Federal Reserve, it did ease worries about the strength of the economy. This encouraged traders who bought the dollar for safe-haven protection to liquidate those positions, driving the greenback lower.

At 19:00 GMT, September U.S. Dollar Index futures are trading 106.815, down 0.144 or -0.13%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.57, down $0.02 or -0.07%.

In economic news, the June employment report showed jobs growing at a faster clip than expected. Non-Farm payrolls increased 372,000 last month, according to the Bureau of Labor Statistics. Economists predicted the U.S. economy would add 260,000 jobs, according to Dow Jones. The unemployment rate was 3.6%, which was unchanged from May.

I don’t think there is anything in this report to persuade the Fed from raising rates 75-basis points at its July 27 meeting.

Daily September U.S. Dollar Index

Short-Term Outlook

Trader reaction to 106.959 is likely to determine the direction of the September U.S. Dollar Index into the close on Friday.

Bullish Scenario

A sustained move over 106.959 will indicate the presence of buyers. If this creates enough upside momentum then look for a retest of the intraday high at 107.615. A move through this level could extend the intraday rally into the long-term Fibonacci level at 107.780.

Bearish Scenario

A sustained move under 106.959 will signal the presence of sellers. A trade through the intraday low at 106.640 will indicate the selling pressure is getting stronger.

A close under 106.959 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Easing on Position-Squaring Ahead of Friday’s NFP Report

The U.S. Dollar is edging lower against a basket of major currencies on Thursday as some traders book profits and square positions ahead of Friday’s major U.S. Non-Farm Payrolls report.

The greenback is also being pressured by a firm British Pound, which rose after hitting a more than two-year low the day before on expectations of the resignation of U.K. Prime Minister Boris Johnson after more than 50 members of parliament resigned from his government within 48 hours.

At 10:59 GMT, September U.S. Dollar Index futures are trading 106.610, down $0.288 or -0.27%. On Wednesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.59, up $0.14 or +0.47%.

The dollar also eased against the Euro after reaching a 20-year high against the single-currency on Wednesday. The move is likely being fueled by position-squaring as investors grappled with the risks of a recession and a potential pause in interest rate hikes.

The safe-haven Swiss Franc and Japanese Yen also rose against the dollar. According to reports, higher inflation readings may force the Swiss National Bank to soon tighten its policy. Last month it hiked its policy rate for the first time in 15 years.

Despite the early weakness, the selling pressure could ease because of rising U.S. Treasury yields. That could be determined by trader reaction to today’s Challenger Job Cuts, Weekly Unemployment Claims and the Trade Balance report.

Daily September U.S. Dollar Index

Short-Term Outlook

Trader reaction to 106.898 is likely to set the tone on Thursday.

Bearish Scenario

A sustained move under 106.898 will indicate the presence of sellers. Taking out yesterday’s low at 106.135 will indicate the selling pressure is getting stronger. This will also make 107.070 a new minor top.

If the selling pressure is able to gain some momentum then look for a potential pullback into the short-term retracement zone at 105.135 to 104.680.

Bullish Scenario

A sustained move over 106.898 will signal the return of buyers. The first target is yesterday’s high at 107.070. Overcoming this level could trigger an acceleration to the upside with the long-term Fibonacci level at 107.780 the next major target.

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

U.S. Dollar Trending Higher as Primary Global Reserve Currency

As we move into the summer, the stock indices have not only been choppy but continue to trend lower.

Commodities, metals, and energy appear to be topping and experiencing distribution.

U.S. Dollar 1 year relative performance
Source: finviz

Cash is King as traders are now placing a value on liquidity. As losses mount and capital evaporates, traders are liquidating many different assets to meet margin calls and raise needed cash.

Going to cash and salvaging what is left is a survivalist strategy. It has many benefits providing peace of mind as well as the future potential to generate significant returns down the road. If a trader does nothing and their capital continues to evaporate, it can be fatal to a trader’s overall attitude and hinder their ability to generate future profits.

Markets go up, and markets go down. What makes the big difference is how we manage risk and how well we do in following the direction of price. Knowing and controlling one’s emotions dictates how long we can play the game or how successful we will be.

Now is not a good time for traders to become complacent or ignore their basic money management and risk principles.

U.S. DOLLAR 14-YEAR UP TREND

  • U.S. Dollar has been up 14.28 years from 2008 to 2022.
  • 2012-2016 U.S. Presidential Cycle: USD appreciated +37.20%
  • 2016-2020 U.S. Presidential Cycle: USD depreciated – 12.80%
  • 2020-2022 U.S. Presidential Cycle: USD appreciated +17.35% to date
  • U.S. Dollar New 14-year high

US DOLLAR INDEX • DXY  • WEEKLY

U.S. Dollar 14 year chart

U.S. DOLLAR ‘UUP’ ETF +16.96%

  • January 6, 2021, to present USD ETF UUP + 16.96%
  • Pullbacks or corrections have typically been 3-4%
  • Pullbacks or corrections have typically lasted 20-50 days
  • Price target extensions for potential resistance are at $36, $42, & $48

INVESCO DB USD INDEX BULLISH FUND ETF • UUP • ARCA • DAILY

U.S. Dollar UUP chart

U.S. DOLLAR VS U.S. EQUITY INDICES

  • Comparative Percentage Chart: U.S. Dollar ETF VS U.S. Equity Indices ETFs
  • Timeframe: January 6, 2021, to present
  • 372 bars, 539 days, 77 weeks, 17.9 months, or 1.47 years
  • +10.65% USDU ETF: Wisdom Tree Bloomberg U.S. Dollar Bullish Fund
  • +2.75% SPY ETF: S&P 500
  • +2.61% DIA ETF: Dow Jones Industrial Average
  • -8.15% QQQ ETF: Nasdaq 100
  • -12.01% IWM ETF: Russell 2000
  • Maximum spread equals 22.66% (+10.65% USDU vs -12.01% IWM)
  • Forecast is that the spread will continue to expand

WISDOMTREE BLOOMBERG U.S. DOLLAR BULLISH FUND • USDU • ARCA • DAILY

U.S. Dollar vs Equity chart

LEARN FROM OUR TEAM OF SEASONED TRADERS

In today’s market environment, it’s imperative to assess our trading plans, portfolio holdings, and cash reserves. As professional technical traders, we always follow price. At first glance, this seems very straightforward and simple. But emotions can interfere with a trader’s success when they buck the trend (price). Remember, our ego aside protecting our hard-earned capital is essential to our survival and success.

Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:

  • A loss of 10% requires an 11% gain to recover.
  • A 50% loss requires a 100% gain to recover.
  • A 60% loss requires an even more daunting 150% gain to simply break even.

Recovery time also varies significantly depending upon the magnitude of the drawdown:

  • A 10% drawdown can typically be recovered in weeks to a few months.
  • A 50% drawdown may take many years to recover.

Depending on a trader’s age, they may not have the time to wait nor the patience for a market recovery. Successful traders know it’s critical to keep drawdowns with reason, as most have learned this principle the hard way.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition. Click on the following link: www.TheTechnicalTraders.com to learn how.

Chris Vermeulen
Chief Market Strategist

U.S. Dollar Index (DX) Futures Technical Analysis – Boosted Amid Recession Fears, Disappointing Economic Data

The U.S. Dollar jumped against a basket of major currencies on Friday, edging closer to a 20-year high reached on June 15. The move was fueled by safe-haven buying, amid recession fears and disappointing economic data.

Investors sought protection in U.S. Treasury bonds, the Japanese Yen and the U.S. Dollar after the ISM manufacturing index came in at 53, slightly below a Dow Jones estimate of 54.3.

The news came in on top of a government report released on Thursday that showed the core personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 4.7% in May. The number came in 0.2 percentage points below last month’s figure, but still around levels not seen in over 40 years. The PCE index was expected to show a year-over-year increase of 4.8% for May, according to Dow Jones.

On Friday, the September U.S. Dollar Index settled at 104.909, up 0.4450 or +0.42%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $28.07, up $0.11 or +0.38%.

Daily September U.S. Dollar Index

Short-Term Outlook

Traders will be watching U.S. economic data over the near-term. The Federal Reserve will be using these results to decide the course of monetary policy at its July 26-27 meeting. The key data ahead of the meeting are U.S. Non-Farm Payrolls on July 8 and the Consumer Price Index (CPI) on July 13.

Trader reaction to 104.910 is likely to determine the direction of the September U.S. Dollar Index early Monday. However, traders are expecting volume to be extremely light because of a U.S. bank holiday.

Bullish Scenario

A sustained move over 104.910 will indicate the presence of buyers. Taking out Friday’s high at 105.440 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the main top at 105.475 the next key target.

Taking out 105.475 will reaffirm the uptrend. If the buying volume is strong enough, we could see an acceleration to the upside with the long-term Fibonacci level at 107.780 the next major target.

Bearish Scenario

A sustained move under 104.910 will signal the presence of sellers. If this produces enough downside momentum then look for a test of the pivot at 104.340.

Buyers could come in on the first test of 104.340, but if it fails then look for the selling pressure to possibly extend into a support cluster at 103.325 – 103.200.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Weakens After PCE Inflation Data Cools More than Expected

The U.S. Dollar is trading lower against a basket of major currencies late in the session on Thursday after giving back all of its earlier gains. The move started when U.S. Treasury yields dropped after key inflation data came in slightly cooler than expected.

Some traders are blaming below average volume and position-squaring ahead of the long U.S. holiday weekend for the market’s reversal.

At 19:20 GMT, September U.S. Dollar Index futures are trading 104.455, down 0.394 or -0.38%. The Invesco DB US Dollar Index Bullish Fund is at $27.95, down $0.10 or -0.37%.

In economic news, the core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, rose 4.7% in May, the Commerce Department reported Thursday. That’s 0.2 percentage points less than the month before, but still around levels last seen in the 1980s. The index was expected to show a year-over-year increase of 4.8% for May, according to Dow Jones.

Daily September U.S. Dollar Index

Short-Term Outlook

Trader reaction to the minor pivot at 104.850 is likely to determine the direction of the September U.S. Dollar Index into the close on Thursday.

Bearish Scenario

A sustained move under 104.850 will indicate the presence of sellers. Crossing to the weak side of the minor pivot at 104.335 will indicate the selling pressure is getting stronger. If this creates enough downside momentum then look for a possible acceleration into the support cluster at 103.320 to 103.200.

Bullish Scenario

A sustained move over 104.850 will signal the presence of buyers. If this generates enough upside momentum then look for a surge into the intraday high at 105.315, followed by the main top at 105.475.

A trade through the main top at 105.475 will negate a closing price reversal top, putting the market in a position to possibly accelerate to the upside with the long-term Fibonacci level at 107.780 the next major target.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Strong Euro, Lower US Rate Hike Expectations Capping Gains

The U.S. Dollar is trading flat against a basket of major currencies for the sixth straight session on Tuesday, putting traders on alert for the return of volatility. The catalyst today could be one of a number of U.S. economic reports ranging from the Goods Trade Balance at 12:30 GMT to the Conference Board’s Consumer Confidence at 14:00 GMT.

At 08:33 GMT, September U.S. Dollar Index futures are trading 103.700, up 0.022 or +0.02%. On Monday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.74, down $0.04 or -0.14%.

Helping to keep a lid on prices is a jump in Euro Zone government bond yields. The move is helping to boost the value of the Euro, which is a major component of the dollar index.

Traders are boosting the single-currency ahead of a speech by European Central Bank (ECB) president Christine Lagarde and more ECB speakers during the day. Investors are hoping the speakers offer more hints on how steep the monetary tightening path will be.

Although the greenback is still trading near its multi-year high at 105.79, it has been pulling back for nearly a week as financial market traders reduced peak rates from 4% to 3.5% for next year.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at 105.475 on June 15.

A trade through 105.475 will negate the closing price reversal top and signal a resumption of the uptrend. A move through the main bottoms at 101.445 and 101.170 will change the main trend to down.

The minor trend is also up. A trade through 102.005 will change the minor trend to down and confirm the shift in momentum.

The minor range is 105.475 to 103.200. Its pivot at 104.340 is resistance.

The short-term range is 101.170 to 105.475. Its downside target is the retracement zone at 103.320 to 102.815.

The main support is the long-term 50% level at 101.125.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 103.325 is likely to determine the direction of the September U.S. Dollar Index on Tuesday.

Bullish Scenario

A sustained move over 103.325 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the pivot at 104.340. Overtaking this level could trigger an acceleration into the main top at 105.475.

Bearish Scenario

A sustained move under 103.325 will signal the presence of sellers. Taking out the main bottom at 103.200 will indicate the selling pressure is getting stronger with 102.815 the next likely target. This is a potential trigger point for an acceleration into the minor bottom at 102.005, followed by a pair of main bottoms at 101.445 and 101.170. The major 50% level at 101.125 is also a potential downside target price.

Side Notes

Volume is extremely light ahead of the end of the quarter and next Monday’s U.S. holiday. Furthermore, traders are awaiting fresh U.S. data on Non-Farm Payrolls and Consumer Inflation. Additionally, there is still a major debate going on about whether the Fed should continue to lift rates aggressively, or dial it down a little in order to avoid a recession.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Hawkish Powell Will Put 105.475 on Radar

The U.S. Dollar is trading higher against a basket of major currencies on Wednesday as investors await Fed Chairman Jerome Powell’s first day of testimony this week before the Senate Banking Committee. Investors will be looking for further clues about whether another 75 basis point rate hike is in the cards at the Fed’s July meeting. This would follow a similar rate hike from policymakers earlier in the month.

However, I believe the bigger headline will be Powell’s response to questions from Senators regarding whether he believes the Fed can raise rates and lower inflation without weakening the labor market or causing a recession.

At 07:43 GMT, September U.S. Dollar Index futures are trading 104.710, up 0.499 or +0.48%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.87, down 0.08 or -0.30%.

Powell Expected to Be Grilled…and It Could Get Political

When asking Powell about inflation, the Republicans on the committee could point to stimulus spending by the Biden Administration and a weak energy policy as the main reasons for high inflation. Democrats will counter that by saying the pandemic spending began with the Trump administration.

The most important line of questioning, in my opinion, will be regarding the odds of a recession. Expect Powell to get questions around the likelihood and severity of a recession.

If Powell comes across as hawkish then look for the dollar to surge. The U.S. Dollar is likely to weaken if Powell doesn’t sound confident in his responses regarding the possibility of recession.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

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 change the minor trend to down. This will confirm the shift in momentum.

The minor range is 105.475 to 103.200. The index is currently straddling its pivot at 104.340.

The short-term range is 101.170 to 105.475. Its retracement zone at 103.320 to 102.815 is support. This zone stopped the selling at 103.200 on June 16.

The major support is a long-term 50% level at 101.125.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at 104.340 is likely to determine the direction of the September U.S. Dollar Index on Wednesday.

Bullish Scenario

A sustained move over 104.340 will indicate the presence of buyers. If this creates enough upside momentum then look for a possibly surge into the main top at 105.475.

Bearish Scenario

A sustained move under 104.340 will signal the presence of sellers. This could trigger a break into a support cluster at 103.320 – 103.200, followed by a short-term Fibonacci level at 102.815.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Firms after Powell Reiterates Pledge to Price Stability

The U.S. Dollar is trading higher against a basket of currencies late Friday, on the back of comments from Federal Reserve Chairman Jerome Powell that reiterated the central bank’s commitment to price stability.

Powell also said the Fed’s rate hikes have been contributing to the confidence in the currency. The Chairman also added the central bank is acutely focused on returning inflation to its 2% mandate.

At 19:01 GMT, September U.S. Dollar Index futures are trading 104.465, up 1.048 or 1.01%. The Invesco DB US Dollar Index Bullish Fund is at $27.94, up $0.27 or +0.98%.

US Economic Data Shows Weakens

In U.S. economic news, the Federal Reserve released a report showing industrial production increased by less than expected in the month of May.

The central bank reported industrial production crept up by 0.2% in May after surging by an upwardly revised 1.4% in April. Economists were looking for a 0.4% increase compared to the 1.1% jump originally reported the previous month.

In another report, the Conference Board showed continued weakness in its May Leading U.S. Economic Indicators report. The data showed the CB’s leading economic index fell by 0.4% in May, matching the revised drop seen in April as well as economist forecasts.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the confirmation of Wednesday’s closing price reversal top.

A trade through 105.475 will negate the closing price reversal top and 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 change the minor trend to down. This will confirm the shift in momentum.

The minor range is 105.475 to 103.200. The market is trading on the strong side of its pivot at 104.340, making it support.

The short-term range is 101.170 to 105.475. Its retracement zone at 103.320 to 102.815. This zone stopped the selling at 103.200 on Thursday.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at 104.340 is likely to determine the direction of the September U.S. Dollar Index into the close on Friday.

Bullish Scenario

A sustained move over 104.340 will indicate the presence of buyers. If this move generates enough upside momentum then look for a possible surge into the main top at 105.475.

Bearish Scenario

A sustained move under 104.340 will signal the presence of sellers. If this move creates enough downside momentum then look for a late session break into the short-term retracement zone at 103.320 to 102.815.

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

U.S. Dollar Index (DX) Futures Technical Analysis – BOJ Policy Decision Could Set Friday’s Early Tone

The U.S. Dollar closed sharply lower against a basket of major currencies on Thursday as traders continued to digest the impact of the Federal Reserve’s decision to hike interest rates by 75 basis points on Wednesday. The price action suggests that traders may believe the Fed is trying to cause a recession in order to slow down the economy and gain control over inflation.

The greenback was also pressured by strong rallies in the British Pound and Swiss Franc after the Bank of England (BOE) and the Swiss National Bank (SNB) hiked their interest rates as well to combat inflation.

On Thursday, the September U.S. Dollar Index settled at 103.417, down 1.518 or -1.46%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $27.67, down $0.27 or -0.97%.

Following the Fed’s widely expected three-quarters of a point interest rate hike, the SNB unexpectedly raised interest rates for the first time in 14 years.

The BOE also announced another 25 basis point rate hike, its fifth in a row. The BOE’s Monetary Policy Committee voted 6-3 to raise the bank rate to 1.25%, the highest rate in 13 years.

All eyes are now on the Bank of Japan (BOJ) which will make its monetary policy and interest rate decisions early Friday. Some aggressive speculators are betting officials may finally agree to tighten policy.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower following the confirmation of Wednesday’s closing price reversal top.

A trade through 105.475 will negate the closing price reversal top and signal a resumption of the uptrend. A move through the main bottom at 101.445 will change the trend to down.

The minor trend is also up. A trade through 102.005 will change the minor trend to down. This will confirm the shift in momentum.

The short-term range is 101.170 to 105.475. On Thursday, traders tested its retracement zone at 103.320 to 102.815.

The major resistance is a long-term Fibonacci level at 107.780. The major support is a long-term 50% level at 101.125.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term 50% level at 103.325 is likely to determine the direction of the September U.S. Dollar Index early Friday.

Bullish Scenario

A sustained move over 103.325 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into a minor pivot at 104.400. Overcoming this level could trigger a surge into the main top at 105.475.

Bearish Scenario

A sustained move under 103.320 will signal the presence of sellers. This could trigger a break into the short-term Fibonacci level at 102.815. A failure to hold this level could trigger a break into the minor bottom at 102.005.

A trade through 102.005 will shift momentum to the downside. This could lead to a test of the support cluster at 101.170 – 101.125.

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

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.

U.S. Dollar Index (DX) Futures Technical Analysis – Traders Anticipating Extremely Hawkish Fed Tone

The U.S. Dollar finished higher against a basket of its peers on Tuesday, hitting a fresh 20-year high, as investors positioned themselves ahead of a widely expected rate hike from the U.S. Federal Reserve on Wednesday to try to curb stubborn inflation.

On Tuesday, the September U.S. Dollar Index settled at 105.352, up 0.386 or +0.37%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) closed at $28.16, up $0.06 or +0.21%.

A week ago, investors were looking for a 50-basis point rate hike in June and July with the Fed taking a possible breather in September.

As of Tuesday’s close, however, there is now a nearly 90% expectation for a 75 basis-point increase at the conclusion of a two-day meeting on Wednesday, according to Refinitiv’s Fedwatch Tool.

There is also talk on the street that the Fed may be considering an additional 75 basis-point hike in July, followed by a 50 basis-point rise in September.

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 change the minor trend to down. This will shift the momentum.

The nearest support is a trailing retracement zone at 103.320 – 102.815. On the upside, the nearest target is a Fibonacci level at 107.780.

Daily Swing Chart Technical Forecast

Trader reaction to 105.355 is likely to determine the direction of the September U.S. Dollar Index early Wednesday. However, look for extremely light volume with most major traders keeping their powder dry until the Fed announcements at 18:00 GMT.

Bullish Scenario

A sustained move over 105.355 will indicate the presence of buyers. Taking out 105.475 will indicate the buying is getting stronger. This could put the index on course to eventually challenge the long-term Fibonacci level at 107.780.

Bearish Scenario

A sustained move under 105.355 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at 103.323 to 102.815.

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