USD Index

The USD Index Rallies, Sets Up Interesting Trading Week

Posted Tuesday, September 4, 2018 by
Shain Vernier • 1 min read

The September USD Index futures contract has put in a solid day’s work. Trade has been established north of the 95.000 level, a solid barometer of the Greenback’s relative strength. As we have seen throughout the forex session, traders are showing favor toward the USD during this post-holiday weekend trading day.

In an update from earlier, we talked about the rising odds of FED rate hikes facing the USD in September and December. I have gone on the record several times this summer downplaying a potential rate hike in December. This view is certainly under pressure, as the FED appears ready to commit to gradual tightening throughout the end of 2019.

Ultimately, only time will tell if this scenario plays out. However, in the face of trade war fallout and a lagging U.S. housing market, a December rate hike is far from a slam-dunk.

September USD Index Futures

The September USD Index has shown signs of life today, breaking above resistance on the daily time frame. Nonetheless, price remains in a noncommittal technical area. At least for now, this week’s direction has yet to be determined.

September USD Index Futures (DX), Daily Chart
September USD Index Futures (DX), Daily Chart

Here are two levels to watch for the rest of the trading day:

  • Resistance(1): Daily SMA, 95.750
  • Support(1): Bollinger MP, 95.130

Overview: The trading week is just getting started following the muted U.S. Labor Day session. Volumes are up, as is price action. While the USD Index is rotating in a tight range between the Bollinger MP and Daily SMA, I don’t expect this pattern to last. At the very least, a breakout will come to pass by Friday’s U.S. Non-Farm Payrolls release.

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