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US Dollar Futures

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Free in-depth analysis of the US Dollar futures market written by a professional US Dollar trader.

April 10, 2013

Dollar Index Futures Broker, Van Commodities, Inc.

The Dollar Index future (DXM13) has remained well supported even though several pieces of economic data came in weaker than expected for the US economy last week. The Institute of Supply Managers Indices (ISM) for both the manufacturing and non manufacturing sectors, along with employment data, depicted a slower growth environment than the consensus forecast. For global investors US dollar denominated investments appear to be the safest place to park short and longer term liquidity in a world of financial and economic uncertainty. DXM13 has been trading in a roughly two percent range for the past five weeks, apparently working off its overbought condition. 

The direction for the Index still appears to be up over the intermediate term. Over the near term DXM13 may find initial support at 81.90-82.20, and stronger support at 81.00-81.50. Over the intermediate term DXM13 may find initial resistance at 83.50 and stronger resistance 83.75-84.00.

 

March 6, 2013

Dollar Futures Broker, Van Commodities, Inc.

Since February 01 the Dollar Index Future (DXH13) has rallied a little over four and half percent on the back of several factors. Some of the issues leading to renewed investor interest in the Dollar Index include; moves by the Japanese to reflate their economy by turning on the monetary printing press,  concerns over Euro Zone economic and political instability- post the Italian elections, and perceived weakness in global growth manifest by weaker commodity currencies like the Canadian and Australian Dollars. Currency traders may be looking to take profit on some of their long DXH13 positions going into the end of the week when US Nonfarm Payroll and Unemployment data will be released.

 

DXH13 is overbought based on several short term momentum indicators. Although the longer term trend for DXH13 appears to be up, we would not be surprised to see a pullback on profit taking in the 82.62-83.40 area. Initial support on a pullback may come in at 81.40-81.66 and stronger support at 80.75-81.20.

February 3, 2013

Dollar Futures Broker, Van Commodities, Inc.

The Dollar Index (DXH13) continued its slide last week, with an additional push coming at the end of the Federal Reserves Federal Open Market Committee’s (FOMC) meeting on Wednesday. The FOMC announcement to maintain security purchases of eighty-five billion dollars, for an indeterminate period, was expected by the market, but the policy of Quantitative Easing continues to undermine DXH13 bulls.

 

The economic data to be released next week should not have a major effect on the DXH13, but the market will be listening for any possible policy changes from the Bank of England (BOE) and or the European Central Bank (ECB) on Thursday. The economic statistics for the US economy include Factory Orders, The Institute of Supply Managers Non Manufacturing Index (ISM), Weekly Unemployment Claims, Consumer Credit, Trade Balance, and Wholesale Inventories.

 

DXH13 has been trapped in a trading range for the past twenty-one weeks. Friday’s trade took the index down to the bottom end of the range at 79.00 where it found some support. DXH13 is oversold based on several short term momentum indicators. For technicians it will be critical for the Index to hold support at 78.50-79.00. A breach of the 78.50-79.00 level would indicate the possibility for a move toward 76.50. DXH13 should find initial resistance at 79.40-79.80 with stronger selling at 80.10-80.60.

January 8, 2013

Dollar Futures Trader, Van Commodities, Inc.

The Dollar Index future (DXH13) continues to range trade. The larger range for DXH13 is 79.00-84.00 with a tighter range of 79.00-81.75. A break to higher levels would probably occur on the back of a risk off trading environment in financial markets or an unexpected change in interest policy by the European Central Bank (ECB) or Bank of England (BOE) on Thursday, January 10. A move to higher levels for DXH13 would probably be indicated by a trade above 82.00. With a break above 82.00 DXH13 could possibly move towards 84.50 over time, before significant resistance comes in. On the other hand a break below 79.00 would probably be indicative of a risk on trade for financial assets and would possibly take DXH13 toward the 75.70 level.

Commodities Trader, October 29, 2012

The Dollar Index, basis the December contract (DXZ12) traded down close to seven percent at its recent low of 78.72 September 14, 2012 from an intraday high of 84.25 July 24, 2012. The Index has since bounced back to 80.32 on today’s close retracing around twenty five percent of the recent sell off. The trade down since the end of July saw the index give up roughly fifty percent of its rally from a low August 2011 to the high trade at 84.25. The initial pullback started from a technically overbought condition, along with a reduction in fear over a total Euro zone disaster and in the lead up to Ben Bernanke’s Jackson Hole Presentation at the end of August 2012. Market participants continued to sell off the Dollar Index after the Chairman’s presentation on the view that the Federal Reserve would implement Quantitative Easing 3 (QE3) at their September FOMC meeting, and the Federal Reserve did not fail to deliver. 

Over all the Dollar Index has traded within an 18 handle range from 72.08 to 90.09 since the financial collapse of 2008 and it is right around the middle of that range at today’s close. The DXZ12 tends to trades up on risk off days and down when the market is geared for a risk on environment. 

On a technical basis the past thirty-one trading days has allowed DXZ12 to work off its oversold condition on several short term momentum studies. The index became oversold on the sell off from the end of July to early September based on several momentum studies. DXZ12 found support on its way down around its fifty percent retracement level, on a weekly continuation chart, from its low trade in August 2011 and high trade July 2012. Longer term momentum studies are still showing oversold readings, but DXZ12 may start running into sellers initially around 80.60-81.00 and more significant selling 81.40-82.35.

US Dollar Index Futures Broker, April 23, 2012

The U.S. dollar index futures, basis June (DXM12) appreciated strongly Monday, prior to the US trading day. Before too much time had passed in the US morning session, DXM12 peaked and lost over half the gains it had scored during the overseas session, closing up 20 ticks from Friday.

DXM12 traded higher during overseas hours due to nervousness over France’s presidential election, political uncertainty in the Netherlands and weak Markit PMI data out of Europe. Along with the political issues, the PMI’s showed further Euro zone economic contraction that reinforced the continued worries over Europe’s ongoing debt debacle.

The market is looking to the two day FOMC meeting starting Tuesday and Ben Bernanke’s press conference Wednesday for currency direction, based on the Federal Reserves view on the US economy and any mention of further stimulative programs including; extension of Operation Twist, Sterilized QE or any other course of QE.

DXM12 is winding up into a symmetrical triangle. The pattern is a continuation pattern, but the index in this situation could breakout to the upside or breakdown. It appears the direction may be dependent on whether the FOMC statements are supportive to the dollar or show a reflation bias. Thus far the statements made by Mr. Bernanke have tended to undermine DXM12 and favor the risk on trade based on a reflation story.

Going into Wednesday, and the end of the FOMC meeting, DXM12 should find resistance around 80.15 and support at 79.10. A move by DXM12 below 78.80 may signal a breakdown and a move above 80.50 a breakout to the upside. Some traders may take positions ahead of any announcements using option strategies to limit losses on an incorrect view based on their bullish or bearish bias for DXM12.

February 23, 2012

Currency Broker, Van Commodities, Inc.

Today, the currency markets shrugged off the European Commission’s forecast for a mild recession in the Euro-Zone. The Commission expects the Euro-Zone economy to shrink by 0.3% this year, in contrast to the prior forecast of 0.5 percent growth. 

Although US unemployment claims reported February 23, 2012 at 351,000 were slightly better than expected, the Dollar Index futures, basis the March contract, (DXH12) traded lower. The Euro and British Pound, which comprise roughly 70 percent of the DXH12, were significantly stronger verse the Dollar, as were most of the other major trading currencies. It appeared that the currency market took direction from Germany’s stronger than expected IFO Institute’s index which tracks the business environment in Germany, Europe’s largest economy. The IFO index improved to 109.6 in February from 108.3 in January and was significantly stronger than market expectations of 108.8. 

The relative strength of US economic data points over the past two months, verse the Euro-Zone and UK seem to have been ignored by currency markets. It appears the currency markets are more impressed by the improved capital markets situation in the Euro-Zone since the European Central Bank (ECB) introduced its LTRO and covering the previously reported large Euro currency short position. Since the early part of January, when the DXH12 hit a high in its move at 82.05 on January 13, 2012 the DXH12 has retraced close to 50%  of the move, from its lows in May of 2011 at 74.50. The DXH12 trade down has been on declining open interest and the March futures should find support between 78.20, the 50 percent retracement of the up move, and 77.30-an important Fibbonacci level. The 200 DMA also comes in at 77.81 and these three numbers mentioned should provide the DXH12 a tradeable entry point.