The U.S. dollar index (DXY), a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies, began its June Swoon after European Central Bank (ECB) President Mario Draghi said on June 3 that the Eurosystem staff macroeconomic projections foresee annual Harmonised Indices of Consumer Prices (HICP) inflation at 0.3% in 2015, up from –0.1% forecasted in March. HICP is the consumer price inflation measured in the eurozone. In short, Mr. Draghi implied that the bond-buying by the ECB is working. 

There was more downside selling pressure for the greenback the following day after Ms. Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), urged the U.S. Federal Reserve to delay raising interest rates until at least next year. The IMF also lowered its forecast for U.S. gross domestic product (GDP) to 2.5% in 2015, down from the previous forecast of 3.1% growth. 

The U.S. dollar index took another hit on June 8 after a Bloomberg news wire report that President Barack Obama had told a Group of Seven industrial nations summit that the strong dollar was a problem. A senior U.S. official, as well as Mr. Obama himself, later denied that the comment was made. 

The greenback sell-off was unable to recover since Mr. Obama’s alleged comment as more negative headline news kept coming, including one from Mr. Kaushik Basu, the World Bank's chief economist, who urged the Fed to hold off on a rate hike until next year to avoid worsening exchange rate volatility and crimping global growth. The World Bank lowered the growth outlook for the United States to 2.7% this year, from 3.2% in January, and to 2.8% next year, from a previous forecast of 3%. 

The DXY index tumbled 0.81% on Wednesday, June 17 after the two day Federal Open Market Committee (FOMC) meeting, as the Fed sharply downgraded their economic forecast for this year to between 1.8% and 2%, from the previous forecast in March of between 2.3% to 2.7%. Fed Chair Janet Yellen, however, sounded hawkish at the conference as she said the rate hikes are coming. Ms. Yellen insisted the timing will be dependent on statistics in real time.

The Bureau of Labor Statistics, the U.S. Department of Labor, said on Thursday, June 18 that the May Consumer Price Index (CPI) was unchanged from a year ago, in-line with Wall Street economists, according to Reuters. The core CPI for all items less food and energy rose by 1.7% in May over the last year, missing the forecast of 1.8% on a year-on-year basis.

Actually, the Federal Reserve no longer emphasizes the CPI as its official 2.0% inflation target. Instead, it has adopted the personal consumption expenditures (PCE) index, particularly the core PCE with the volatile prices of food and energy stripped out. 

The Bureau of Economic Analysis (BEA), the U.S. Department of Commerce, will release the May personal income and outlays, including the PCE data, on June 25. The analysts at Bank of America Merrill Lynch expect the May core PCE price index, excluding food and energy, to increase 1.2% from a year ago, well below the Fed’s inflation target of 2.0%.

The Greek debt crisis is now in full-blown mode. Greece needs the funds to make a €1.5 billion repayment to the International Monetary Fund by June 30. On Friday, the ECB approved an increase of €1.75 billion in emergency loans to keep Greece’s banking system afloat. There will be an EU leaders emergency summit in Brussels on Monday, June 22 after talks between EU finance ministers in Luxembourg on Thursday, failed to bridge the gap between Greece’s leftist government and its lenders. This could be the last ditch attempt to save Greece from falling into a default. Some eurozone officials believe Greek Prime Minister Alexis Tsipras may want to strike a deal at the summit. 

From our technical viewpoint, a bearish descending triangle is now emerging in the DXY chart pattern. A positive outcome of the EU leaders emergency meeting on Monday could send the U.S. dollar index downward to retest the 93.39 level. 

Some other downside risks for the U.S. dollar index are the final reading of the first quarter U.S. GDP and the May personal income and outlays, including the PCE data, to be released on June 24 and June 25, respectively.

There are supports at around the 92 level, including the 200-day SMA, as well as at the 38.2% Fibonacci retracement level at 90.38, if the DXY index continues its downward trend.