US Dollar Index (DX) Futures Technical Analysis – July 11, 2017 Forecast

September U.S. Dollar Index futures are trading slightly better early Tuesday on light volume. The index is being primarily supported by a weaker Euro and Japanese Yen. The price action is sluggish because sovereign bond yields are slowing ahead of Federal Reserve Chair Janet Yellen’s remarks before Congress on Wednesday and Thursday.

Traders are hoping Yellen’s testimony reveals clues about the timing of the next Fed interest rate hike. Federal Funds futures traders seem to think the next rate hike will be in December. Yellen may also reveal some new details about the Fed’s plan to begin trimming its massive balance sheet.

There are no major economic reports today, but FOMC Member Lael Brainard is scheduled to speak at 1630 GMT. She is a noted dove so she could make comments about why she opposes a rate hike. If she speaks with conviction then the dollar may break late in the day.

Technical Analysis

The main trend is down according to the daily swing chart. The index formed a secondary higher bottom at 95.525. This indicates the buying is getting stronger.

A trade through 96.255 will change the main trend to up. A move through 95.525 will signal a resumption of the downtrend with the next target a main bottom at 95.225.

The intermediate range is 95.225 to 96.255. Its retracement zone is 95.74 to 96.62. Holding above this zone is giving the market a slight upside bias.

The short-term range is 96.255 to 95.525. Its 50% level or pivot is currently being tested at 95.875. The index could continue to firm if holds above this pivot.

The main range is 97.515 to 95.225. Its retracement zone at 96.37 to 96.64 is the primary upside target.

Forecast

Based on the current price at 95.87, the direction of the index today will be determined by trader reaction to the pivot at this price.

A sustained move over 95.87 will indicate the buying is getting stronger with potential upside targets at 96.01 and 96.13. The latter is the last potential resistance angle before the 96.255 main top.

A sustained move under 93.87 will signal the presence of sellers. This could trigger a break into 95.74, 95.66 and 95.62.

Taking out 95.525 should trigger an acceleration into the key angle at 95.44. This is the last potential support angle before the 95.225 main bottom.

There are no support or resistance clusters so the index is likely to continue to move station to station. This could also lead to a choppy, two-sided trade.