The Dollar Index (DXY) has moved bullish in the last days, correcting the decline it had in the first week of June. In this post, review with us what should be the next path from the US Dollar index in the coming days.
The big picture
Once published May’s non-farm payrolls data release, on June 07, the Dollar index felt to 96.46. During the last week, the Greenback developed a recovery until 97.45. The breakdown shown on the RSI oscillator suggests a call for more declines in the short-term. Two key elements support our bearish perspective. The first one is by the chartist analysis; RSI shows a long-term triangle. After the decline triggered by the NFP data release, the RSI felt below the triangle base-line. The second one is the higher lows sequence that supports a bearish bias. In consequence, in the daily chart, the 60 level should act as a resistance level.
The short-term Scenario
Short-term, the US Dollar Index will be driven by the FOMC meeting. The analysts’ don’t expect changes in the interest rate, currently at 2.50% despite the robust US economic data in the US, in particular in the labour market. The previous Powell’s speeches don’t make us expect a new rate hike, mainly because of trade war factors. In consequence, it is more likely a dovish speech than a hawkish bias for the upcoming FOMC meeting.
From a technical perspective, the current internal bullish sequence is incomplete. We expect limited moves from 97.21 and a new higher low between 97.72 and 98.24. In this area, the Greenback should complete the short-term ascending movement. Once reached the exhaustion area, the DXY should give a pass to a bearish cycle.
The potential profit target of the bearish sequence is between 95.76 and 95.41. The invalidation level is at 98.37.
Remember that the price is not compelled to move as our forecast proposes. The charts released corresponds to the Elliott Wave Theory application.