Yahoo Finance U.S. Dollar Index Futures (DX) Technical Analysis – May 28, 2019 Forecast
The U.S. Dollar is trading slightly higher against a basket of major currencies early Tuesday. The strength is being primarily driven by weakness in the heavily-weighted Euro and the British Pound. Gains are being somewhat offset by a stronger Canadian Dollar and a little demand for the safe-haven Japanese Yen and Swiss Franc.
At 06:16 GMT, June U.S. Dollar Index futures are trading 97.665, up 0.188 or +0.19%.
The early price action suggests dollar traders are waiting for a new catalyst to drive the price action after last week’s plunge in U.S. Treasury yields, following the release of weaker than expected U.S. manufacturing PMI data, drove the dollar down sharply after hitting a two-year high. The overall price action suggests that traders are starting to price in a potential rate cut by the Fed later in the year. However, that’s not likely unless the labor market starts to crack and inflation moves away from the central bank’s 2-percent target.
The Euro is showing a slightly negative response to the EU parliamentary elections. “There is a polarization of the European parliament which is kind of representation of the overall European political situation,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities. “That will be broadly negative for the Euro.”
Yamamoto also said the news of possible disciplinary steps against Italy over its national debt hurt the Euro, though the market reaction was limited due to the U.S. and U.K. holidays.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower following the closing price reversal top on May 23 at 98.260 and the subsequent confirmation of the chart pattern.
A trade through 98.260 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will officially turn down on a move through 96.810.
The short-term range is 98.260 to 97.410. Its 50% level or pivot at 97.835 is the next upside target.
The intermediate range is 96.810 to 98.260. Its retracement zone at 97.535 to 97.364 is a support zone. It stopped the selling at 97.410 on May 24.
The main range is 95.170 to 98.260. If the trend changes to down then its retracement zone at 96.715 to 96.350 will become the primary downside target.
Daily Technical Forecast
Based on the early price action, the direction of the June U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the 50% level at 97.535.
Bullish Scenario
A sustained move over 97.535 will indicate the presence of buyers. If they can create enough upside momentum then look for the rally to possibly extend into the pivot at 97.835. At this point, traders are going to have to decide whether to buy strength through the pivot or sell into the pivot in an effort to form a potentially bearish secondary lower top.
Bearish Scenario
A sustained move under 97.535 will signal the return of sellers. The first target is an uptrending Gann angle at 97.490. If this fails as support then look for a plunge into last week’s low at 97.410, followed closely by a Fibonacci level at 97.364.
The Fib level is the trigger point for an acceleration into another uptrending Gann angle at 97.155.
This article was originally posted on FX Empire
