U.S. Dollar Index (DX) Futures Technical Analysis – Trend Changed to Up, but Struggling to Follow-Through

The U.S. Dollar is inching lower early Monday after a slight follow-through rally earlier in the session. The move suggests that Fridays dramatic spike to the upside may have been more than just end-of-the-month profit-taking.

Although today‘s early move is impressive given the recent sell-off, investors were still expressing caution ahead of a number of central bank announcements and major economic reports in the U.S., especially Friday’s Non-Farm Payrolls report that could have an effect on Federal Reserve policy.

At 07:31 GMT, June U.S. Dollar Index futures are trading 91.215, down 0.055 or -0.06%.

Daily June U.S. Dollar IndexDaily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up when buyers took out 91.105 on Friday. A trade through 90.395 will change the main trend to down.

The short-term range is 89.655 to 93.470. The market is currently testing its retracement zone at 91.100 to 91.555.

The main range is 94.590 to 89.155. Its retracement zone at 91.870 to 92.510 is a potential upside target. This area is controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Monday is likely to be determined by trader reaction to 91.100.

Bullish Scenario

A sustained move over 91.100 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into 91.555. Overtaking this level will target another 50% level at 91.870.

Bearish Scenario

A sustained move under 91.100 will signal the presence of sellers. The first downside target is a minor pivot at 90.890. Aggressive counter-trend buyers could come in on the first test of this level. If it fails then look for the selling to possibly extend into the main bottom at 90.395.

Side Notes

Since Fridays rally was likely fueled by short-covering, the index will have to pullback into at least 90.890 in order to attract real buyers.