The U.S. Dollar is trading lower against a basket of currencies at the mid-session on Tuesday. The price action is being fueled by a drop in U.S. Treasury yields, which is making the U.S. Dollar a less-attractive investment.

The 10-year Treasury yield fell back under 2% on Tuesday as concerns about global economic growth drove investors into safe-haven assets. In Europe, the benchmark 10-year German bund fell to -0.367%, a new record low.

At 17:52 GMT, September U.S. Dollar Index futures are trading 96.235, down 0.174 or -0.18%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on June 25 at 95.365. A trade through 97.265 will change the main trend to up, while a move through 95.365 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is up. This supports the shift in momentum. A trade through 95.560 will change the minor trend to down, while shifting momentum back to the downside.

The short-term range is 97.265 to 95.365. Its retracement zone at 96.315 to 96.540 stopped the rally earlier today at 96.455.

The major retracement zone is 96.205 to 95.850. This zone is controlling the longer-term direction of the index.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 96.235, the direction of the September U.S. Dollar Index into the close is likely to be determined by trader reaction to the main 50% level at 96.205.

Bearish Scenario

A sustained move under 96.205 will indicate the presence of sellers. This could trigger an acceleration to the downside late in the session with the next target the main Fibonacci level at 95.850.

Bullish Scenario

Holding 96.205 will signal the presence of buyers. This could trigger a labored rally with potential resistance the short-term 50% level at 96.315, yesterday’s close at 96.410 and today’s intraday high at 96.455. Taking out this level could trigger a surge into the short-term Fibonacci level at 96.540.

Overview

The dollar is still trying to hold on to the upside momentum created by last week’s dovish comments from Federal Reserve Chairman Jerome Powell and St. Louis Fed President James Bullard as well as the resumption of the trade talks between the United States and China, but the drop in Treasury yields is starting to outweigh the impact of those potentially bullish events.