US Dollar Index (DX) Futures Technical Analysis – July 18, 2017 Forecast
September U.S. Dollar Index futures are trading sharply lower shortly before the regular session opening. The Greenback is trading lower across the board against all major currencies especially the Australian Dollar, where it is down 1.69%
The Australian Dollar is surging against the U.S. Dollar after its central bank revised down the new estimate of “neutral” interest rates, or rates that are not too tight or too loose to the economy, to 3.5 percent, from around 5.0 percent.
On Thursday, the European Central Bank is widely expected to leave interest rates unchanged, but may layout the foundation for a rate hike at its September meeting. Additionally, the Bank of England is strongly considering the start of its tightening cycle and the Bank of Canada raised interest rates last week.
The U.S. Dollar is also being pressured by low inflation and diminishing hopes of a third rate hike by the U.S. Federal Reserve in 2017.
Technical Analysis
The main trend is down according to the daily swing chart. The market isn’t close to changing the main trend to up. The best signal for the start of a short-covering rally will be a closing price reversal bottom on an intraday or daily chart.
On the upside, the resistance is the former bottom at 94.55, followed by 94.97. If the selling pressure continues and is strong enough to trigger an acceleration to the downside then look for a potential move into the September 8, 2016 main bottom at 93.97.
Forecast
Based on the current price at 94.50 and the earlier price action, the direction of the index today is being controlled by the steep downtrending angle at 94.71.
A sustained move under 94.71 will signal the presence of sellers. Holding below the former bottom at 94.555 will indicate the selling is getting stronger. A break through this level accompanied by rising selling volume puts 93.97 on the radar.
Overtaking 94.555 will be the first indication of profit-taking. Crossing to the strong side of the downtrending angle at 94.71 will indicate the short-covering or buying is getting stronger. This could lead to a test of the former bottom at 94.97. This is another trigger point for an acceleration into the next downtrending angle at 95.34.
Basically, stay short as long as the index remains under the downtrending angle at 94.71.
This article was originally posted on FX Empire