.DXY Technicals: Clear Break Below 98.035 Signals Sentiment Shift

.DXY Technicals: Clear Break Below 98.035 Signals Sentiment Shift

$.DXY $DX $USD

Friday, the US Dollar Index (.DXY) finished sharply lower as the EUR moved to a 12-wk high after the ECB increased its stimulus to bolster EU economies hurt by the C-19 coronavirus chaos.

USD has been under pressure for the last 3 wks as risk sentiment improves and stocks rallied on optimism that the worst of the economic downturn from the Medical Malpractice faded.

Last week, June US Dollar Index futures settled at 96.922, down 1.419 or -1.44%.

The Buck moved a bit higher Friday after data showed the US labor market dramatically improved in May.

Friday’s NFPs showed economic conditions have significantly improved as businesses have begun to reopen after shuttering in mid-March to slow the spread of C-19 coronavirus.

The main trend is Norht according to the weekly swing chart, but momentum has been trending lower since the formation of the closing price reversal Top at the week-ending 27 March.

A trade through 103.960 will negate the closing price reversal Top and signal a resumption of the uptrend. A move through 94.530 will change the main trend to South. This will be confirmed by a trade through the contract low at 94.372.

The range is 94.372 to 103.960.

Its Fibo retracement zone at 98.035 to 99.165 is controlling the longer-term direction of the index. Friday, the index closed on the soft side of the zone, making it resistance and further confirming the Southside bias.

Based on the longer-term outlook, the direction of the June US Dollar Index this week will be determined by trader reaction to the main Fibonacci mark at 98.035

A sustained move below 98.035 signals the presence of sellers. If this move continues to drive the Southside momentum then look for a break into an uptrending Gann angle at 96.155.

Look for a technical bounce on the 1st test of this mark. If it fails then look for the selling to extend into the next uptrending Gann angle at 95.345. This is the last support angle before the pair of main bottoms at 94.530 and 94.372.

Overcoming the Fibonacci mark at 98.035 signals the presence of buyers. The 1st target is the downtrending Gann angle at 98.460. Overtaking this angle will indicate the buying is getting stronger. This could trigger a further rally into the 50% mark at 99.167

Have a healthy week, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.