The greenback continues to lose its appeal as a safe-haven asset as investors increased bets on a global economic recovery despite heightened concerns over U.S.-China tensions and mass protests in many U.S. cities that threaten to derail the U.S. economic recovery from coronavirus-related lockdowns.
At 05:36 GMT, June U.S. Dollar Index futures are trading 97.860, up 0.040 or +0.04%.
On Monday, the dollar index futures contract fell 0.53%. Most of the loss was attributed to a rise in the heavily-weighted Euro to a 2-1/2 month high.
In economic news, U.S. manufacturing activity eased off an 11-year low in May and although the reading was weaker than forecast, it fit into markets’ expectations that the worst of the economic downturn was behind as businesses reopen.
Reuters said risk sentiment was hurt only slightly on Monday when Bloomberg reported that China had told state-owned firms to halt purchases of soybeans and pork from the United States, raising concerns that the trade deal between the world’s two biggest economies could be in jeopardy.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. Taking out Monday’s low at 97.770 will reaffirm the downtrend. The main trend changes to up on a move through the nearest main top at 100.605.
The minor trend is also down. A trade through 99.995 will change the minor trend to up. This will also shift momentum to the upside.
The main range is 94.530 to 103.960. Its retracement zone at 98.130 to 99.245 is resistance. This zone is also controlling the longer-term direction of the Dollar Index.
Daily Swing Chart Technical Forecast
Based on the early price action and the current price at 97.860, the direction of the June U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to yesterday’s close at 97.820.
A sustained move under 97.820 will indicate the presence of sellers. There is no immediate downside target, but the daily chart shows there is plenty of room to the downside with the next major target the March 9 main bottom at 94.530.
A sustained move over 97.820 will signal the presence of buyers. This could lead to a test of 98.130. Overtaking this level will indicate the selling is getting weaker, or the short-covering stronger.
A close over 97.820 will form a closing price reversal bottom. If confirmed, this could lead to the start of a 2 to 3 day rally.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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