US Dollar Index (DX) Futures Technical Analysis – February 12, 2016 Forecast
March U.S. Dollar Index futures are trading a little better as we approach the regular session opening. Today’s price action after the steep sell-off earlier in the week suggests the market has priced-in fully the idea that the Fed will refrain from additional rate hikes in 2016.
The direction of the dollar today is likely to be determined by trader reaction to U.S. retail sales and import prices at 8:30 a.m. ET and consumer sentiment and business inventories set to come out at 10:00 a.m. ET.
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Stronger-than-expected reports won’t reverse the thought about Fed rate hikes, but it could give short-sellers an excuse to book profits, triggering a short-covering rally.
Monday is also a U.S. bank holiday so this may also encourage short-covering, profit-taking and position-squaring today.
Technically, the main trend is down according to the daily swing chart. A trade through 95.28 will signal a resumption of the downtrend.
Based on the early price action, the direction of the market today is likely to be determined by trader reaction to the downtrending angle at 95.95. This is followed by the major Fibonacci level at 96.02.
The Fib level at 96.02 is a trigger point for a steep upside breakout. This move could create some strong upside momentum since there isn’t any resistance until 96.91.
The inability to overcome the angle at 95.95 will indicate the presence of sellers. This could generate enough downside momentum to challenge yesterday’s low at 95.28. This price is also the trigger point for a possible break into the weekly angle at 94.69.
Watch the price action and read the order flow at 95.95. Trader reaction to this angle will tell us if the bulls or the bears are in control today.