The U.S. Dollar posted a third consecutive lower-low against a basket of major currencies on Friday despite stronger-than-expected U.S. inflation data. Sellers apparently weren’t rattled enough to reduce their convictions that the U.S. Federal Reserve will start trimming interest rates at its monetary policy meeting at the end of July.
On Friday, September U.S. Dollar Index futures settled at 96.405, down 0.335 or -0.35%.
Data on Thursday showed the core U.S. consumer price index, excluding food and energy, rose 0.3% in June, the largest increase since January 2018.
Treasury yields on Friday also weakened, making the U.S. Dollar a less-attractive investment.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The formation of a secondary lower top on July 9 reaffirmed the downtrend.
A trade through 97.195 will change the main trend to up. This is followed closely by another main top at 97.265, which is a potential trigger point for an acceleration to the upside.
A trade through 95.365 will reaffirm the downtrend but sellers have to take out a series of retracement levels before we’ll see that.
The short-term range is 95.365 to 97.195. Its retracement zone at 96.280 to 96.065 is potential support.
The major range is 94.696 to 97.715. Its retracement zone at 96.210 to 95.850 is also support. This zone is controlling the longer-term direction of the index.
Combining the two retracement zones makes 96.280 to 96.210 the key area to watch.
Daily Swing Chart Technical Forecast
If the downside momentum continues then look for a drive into the short-term 50% level at 96.280 and the main 50% level at 96.210. Trader reaction to this area should determine the direction of the September U.S. Dollar Index on Monday.
Holding above 96.280 will indicate the presence of buyers. This could trigger a counter-trend rally. Taking out 96.775 will shift momentum to the upside.
Taking out and sustaining a move under 96.210 will indicate the selling is getting stronger. This could spike the market into the short-term Fibonacci level at 96.065. If this fails then look for the selling to possibly extend into the major Fibonacci level at 95.850. This is a potential trigger point for an acceleration to the downside.
This article was originally posted on FX Empire
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