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.

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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.

Investors Who Are Liquidating To A Cash Position – What To Do Next?

Bank of America, Michael Hartnett, Chief Investment Strategist recently stated, “The bear-market rally for stocks has disappeared as investor concerns about inflation and interest rates linger.” “We’re in a technical recession but just don’t realize it.”

Freight Waves, Henry Byers reported, “US import demand is dropping off a cliff as inbound container volumes to the US are reverting to pre-pandemic levels.” Byers went on to say that “The consumer is getting crushed as conditions for the consumer seem to be getting worse and worse as inflation takes hold and prices get more and more expensive.”

We have quickly moved from seeing the dark clouds on the horizon to the start of entering the initial storm wall. The USD put in a major low on January 6th, 2021. Since then it has been in a strong uptrend as global investors seek safety with the uncertainties about geopolitical events, record inflation, rising interest rates, slowing housing, plummeting auto sales, increasing retail inventories, expanding consumer credit, and pending layoffs.

Relative performance USD

Source: finviz

US DOLLAR ETF: UUP +16.69%

UUP remains in its uptrend as the price continues to move up from its base of accumulation.

After having a brief 2-week pullback of -3.45% UUP has found support and is now looking to extend its bull market trend.

Investors who are liquidating stocks and moving to a cash position could consider UUP to capitalize on the strengthening US Dollar.

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

USD index for UUP

20+ YEAR TREASURY INVERTED ETF: TBF +38.89%

TBF remains in its uptrend as the price continues to move up from its base of accumulation.

After having a 3-week pullback of -6.21% TBF has found support and is now looking to extend its bull market trend.

Investors who are liquidating stocks and moving to a cash position could consider TBF to capitalize on the FED raising interest rates to try and curb inflation.

PROSHARES SHORT 1X 20+ YEAR TREASURY ETF • TBF • ARCA • DAILY

20+ year treasury ETF TBF

S&P 500 SHORT INVERTED ETF: SH +19.33%

SH remains in its uptrend as the price continues to move up from its base of accumulation.

After having a 2+-week pullback of -7.19% SH has found support and is now looking to extend its bull market trend.

Investors who are liquidating stocks and moving to a cash position could consider SH to capitalize on the falling stock market.

PROSHARES SHORT 1X S&P 500 ETF • SH • ARCA • DAILY

S&P 500 short inverted ETF SH

Valuable Insights From Successful Traders

Market Wizards by Jack D Schwager is packed with insights from successful traders who have shared their wisdom based on firsthand trading experiences. Here are a few of our favorites:

Paul Tudor Jones:

  • “If you have a losing position that is making you uncomfortable, the solution is very simple; get out, because you can always get back in.”
  • “There is nothing better than a fresh start.”

Ed Seykota:

  • “There are old traders and there are bold traders, but there are very few old, bold traders.”
  • “Losing a position is aggravating, whereas losing your nerve is devastating.”
  • “Good traders; Many are called, and few are chosen.”

Larry Hite:

  • “We always follow the trends, and we never deviate from our methods.”
  • “I have two basic rules about winning in trading as well as in life; If you don’t bet, you can’t win.”
  • “If you lose all your chips you can’t bet.”

What Strategies Can Help You Navigate the Current Market Trends?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

Historically, bonds have served as one of these safe-havens. This is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there? How can they be deployed in a bond replacement strategy?

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 which include a real estate ETF. We can help you protect and grow your wealth in any type of market condition. Click the following link to learn more: www.TheTechnicalTraders.com

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

Chris Vermeulen

U.S. Dollar Index (DX) Futures Technical Analysis – Looking to Challenge 104.80 as U.S. Yields Climb Higher

The U.S. Dollar is trading sharply higher against a basket of major currencies early Monday as red hot U.S. inflation data drove up Treasury yields, making the greenback an attractive asset.

The benchmark U.S. 10-year yield touched 3.2% on Monday morning, having gained nearly 12 basis points on Friday after U.S. inflation beat expectations, driving bets that the Fed will have to hike rates even more aggressively. The two-year yield extended Friday’s gains to touch 3.159% in early trade, a fresh 14 year high.

At 05:12 GMT, September U.S. Dollar Index futures are trading 104.440, up 0.427 or +0.41%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.84, up $0.23 or +0.83%.

Market pricing indicates roughly a two-thirds chance of at least 125 basis points of hikes across the Fed’s next two meetings – on Tuesday and Wednesday this week and in July – according to the CME’s FedWatch tool.

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 the intraday high at 104.450 will signal a resumption of the uptrend. Taking out the main top at 104.800 will reaffirm the uptrend. A move through 101.445 will change the main trend to down.

The minor range is 104.800 to 101.170. The market is trading on the strong side of its pivot at 102.985, making it support. Additional support is the long-term 50% level at 101.125.

Daily Swing Chart Technical Forecast

Trader reaction to 104.013 is likely to determine the direction of the September U.S. Dollar Index early Monday.

Bullish Scenario

A sustained move over 104.013 will indicate the presence of buyers. Taking out 104.450 will indicate the buying is getting stronger. A move through 104.800 will reaffirm the uptrend and could trigger an acceleration to the upside. The nearest target is the long-term Fibonacci level at 107.780.

Bearish Scenario

A sustained move under 104.013 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 102.985.

Since the main trend is up, buyers could come in on the first test of 102.985. If it fails then look for the selling to possibly extend into the minor bottom at 102.005, followed by a pair of main bottoms at 101.445 and a 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 – Traders Betting on More Aggressive Fed Policy Tightening

The U.S. Dollar is trading near a four-year high against a basket of peers Friday afternoon, after government data showed U.S. consumer prices picked up the pace in May, strengthening expectations the Federal Reserve may have to continue to increase interest rates aggressively through September to combat inflation.

At 18:00 GMT, September U.S. Dollar Index futures are trading 104.060, up 0.979 or +0.95%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $27.84, up $0.23 or +0.83%.

Greenback Underpinned by Higher Treasury Yields

The U.S. Labor Department on Friday reported in the 12 months through May, the Consumer Price Index increased 8.6% after rising 8.3% in April. Economists had hoped that the annual CPI rate peaked in April.

Following the inflation report, two-year Treasury yields, which are highly sensitive to rate hikes, spiked to 3.057%, the highest since June 2008. Benchmark 10-year yields reached 3.178%, the highest since May 9.

Dollar Bulls Anticipating Stronger Fed Response to Soaring Inflation

The Fed is expected to raise its benchmark interest rates 50 basis points next Wednesday. Traders are also looking for a similar move in July. Now that there is little evidence that inflation has peaked, the market expects the Fed to speed up rate hikes with the possibility of an additional 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 the intraday high at 104.090 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 move through 102.005 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is 104.800 to 101.170. The index is trading on the strong side of its retracement zone at 103.410 to 102.985, making it support.

The minor range is 101.170 to 104.090. Its 50% level at 102.630 is trailing support.

Daily Swing Chart Technical Forecast

Trader reaction to 103.080 will determine the direction of the September U.S. Dollar Index into the close on Friday.

Bullish Scenario

A sustained move over 103.080 will indicate the presence of buyers. Overtaking and holding the short-term Fibonacci level at 103.410 will indicate the buying is getting stronger.

A late session trade through the intraday high at 104.090 could trigger a near-term acceleration to the upside with 104.800 the next target.

Bearish Scenario

A sustained move under 103.080 will signal the presence of sellers. This will put the market in a position to form a potentially bearish closing price reversal top.

Potential downside targets come in at 102.985 and 102.630. The latter is the last potential support before the 102.005 minor bottom.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Core Inflation Number Sets the Tone on Friday

The U.S. Dollar closed sharply higher against a basket of major currencies on Thursday, ahead of key inflation data that should influence the Federal Reserve’s policy tightening path.

The rally by the greenback was primarily driven by a steep drop in the Euro, which surprisingly fell after the European Central Bank (ECB) said it would start its rate-hike campaign next month.

On Thursday, September U.S. Dollar Index futures settled at 102.406, up 0.231 or +0.23%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $27.61, up $0.20 or +0.73%.

Cooler Inflation Could Limit Gains

According to Reuters, U.S. core consumer price growth is expected to cool a fraction. Such an outcome would provide some reassurance to those hoping decades-high inflation had peaked in March and that the April pullback was not a one-off.

A slight dip in core inflation could be enough to calm traders’ nerves about the Fed continuing its aggressive rate-hiking ways. But a higher core figure would mean the Fed is going to have to continue to raise rates at a fast pace. This would be bearish for Treasury bonds and bullish for the dollar.

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 103.215 will signal a resumption of the uptrend. A move through 101.445 will change the main trend to down. Taking out 101.170 will reaffirm the downtrend.

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

The short-term range is 104.800 to 101.170. The index closed inside its retracement zone at 102.985 to 103.415.

The minor range is 101.170 to 103.215. Its pivot at 102.190 is the nearest support.

Short-Term Outlook

Trader reaction to 102.985 is likely to determine the direction of the September U.S. Dollar Index early Friday.

A sustained move over 102.985 will indicate the presence of buyers. This could drive the market into 103.415. This price is a potential trigger point for an acceleration to the upside.

A sustained move under 102.985 will signal the presence of sellers. This could lead to a steep break into the pivot at 102.190.

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