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U.S. Dollar Index Futures (DX) Technical Analysis – Jump in Euro Zone PMI Could Spike Dollar Index Lower

James Hyerczyk

The U.S. Dollar is trading slightly higher against a basket of major currencies. The greenback is posting gains against a few of its key components including the Euro, British Pound, and Canadian Dollar. It’s losing ground against the safe-haven Japanese Yen and Swiss Franc.

Persistent U.S.-China trade fears and Brexit concerns are controlling most of the price action. Lower Treasury yields and a drop in demand for risky assets suggest that the dollar’s strength is being fueled by safe-haven buying.

Worries over the European parliamentary elections may be weighing on the Euro. Brexit worries and the possible resignation of U.K. Prime Minister Theresa May are pressuring the British Pound. Plunging crude oil prices are boosting the U.S. Dollar against its Canadian counterpart.

All of these events are helping to drive investors into the safety of the Yen and the Swiss Franc. Traders are also saying that reports that the United States could impose restrictions on Chinese technology company Hikvision renewed market jitters.

Heightened Volatility With Release of Euro Zone Manufacturing and Services PMI

We’re looking for heightened volatility with the release of the Euro Zone manufacturing and services PMI at 08:00 GMT. Flash Manufacturing PMI is expected to come in at 48.2. Flash Services PMI is expected to come in at 53.0.

Better-than-expected data could spike the Euro higher and the U.S. Dollar Index lower. The index could make a new high for the year if the data comes in weaker than expected.

At 07:14 GMT, the June U.S. Dollar Index is trading 98.060, up 0.179 or -0.18%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.085 will signal a resumption of the uptrend. This will also be a new high for the year. It will also start putting talk of a move to 100.000 into the conversation.

The main trend changes to down on a trade through 96.810. Today is also the eighth day up from the last main bottom. This puts the index in a position to post a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 97.635 will change the minor trend to down. This will also shift momentum to the downside.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June U.S. Dollar Index on Thursday is likely to be determined by trader reaction to yesterday’s close at 97.881.

Bullish Scenario

Holding above 97.881 will indicate the presence of buyers. This could lead to a breakout over the main top at 98.085 and a potential acceleration to the upside.

Bearish Scenario

A sustained move under 97.881 will signal the presence of sellers. This will put the dollar index in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to a 2 to 3 day counter-trend break.

This article was originally posted on FX Empire