The U.S. Dollar is trading nearly flat against a basket of currencies on Tuesday. The range is tight and volume is low ahead of the release of the U.S. Producer Inflation and Core Producer Inflation reports. They are expected to come in at 0.1% and 0.2% respectively. Lower than expected numbers will increase the odds of a Fed rate cut in either June or July. This could put renewed pressure on the greenback.
At 10:44 GMT, June U.S. Dollar Index futures are trading 96.705, down 0.006 or -0.01%.
A slightly better Euro is helping to limit gains as well as a stronger Canadian Dollar and British Pound. The Sterling is picking up a strong bid on talk of a rate hike. Increased demand for higher risk is helping to boost the dollar against the safe-haven Swiss Franc and Japanese Yen.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 96.405 will signal a resumption of the downtrend with 96.365 the next target. We could be looking at a steep break if this bottom fails.
A trade through 97.390 will change the main trend to up. We’re not likely to take out this top unless the Euro collapses.
The main range is 95.170 to 98.260. Its retracement zone at 97.715 to 96.350 is controlling the longer-term direction of the index. The index has been straddling the upper or 50% level of this zone for five sessions.
Daily Technical Forecast
Based on the early price action and the current price at 97.705, the direction of the June U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the 50% level at 96.715.
A sustained move over 96.715 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential rally into the uptrending Gann angle at 96.985. Overcoming this angle will indicate the buying is getting stronger.
A sustained move under 96.715 will signal the presence of sellers. Crossing to the weak side of the downtrending Gann angle at 96.635 will put the index in a bearish position. This could trigger a break into last week’s low at 96.405, followed by 96.365 and 96.350. Look for an acceleration to the downside if 96.350 fails with the next target angle coming in at 96.080.
This article was originally posted on FX Empire