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James Hyerczyk
US Dollar Index

The U.S. Dollar Index edged lower against a basket of major currencies on Friday, giving back some of the week’s gains built on increased caution over a global surge in coronavirus cases and fading prospects for a U.S. stimulus package before the November 3 election.

The greenback clawed back some of its earlier losses after better-than-expected U.S. retail sales data helped dampen some of the concerns about the health of the U.S. consumer. U.S. retail sales increased more than expected in September.

On Friday, December U.S. Dollar Index futures settled at 93.679, down 0.185 or -0.20%.

Also in the United States, relief plans remained bogged down in a three-way negotiation between the White House, Senate Republicans and House Democrats. The news suggests Senate Republicans may already be distancing themselves from Trump as the latest polls shows the President trailing Joe Biden in his attempt to get re-elected.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a move through 93.000. A move through 94.800 will reaffirm the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 93.975 will change the minor trend to up. A move through 94.090 will reaffirm the uptrend.

The first minor range is 91.750 to 94.800. Its 50% level at 93.275 is support.

The second minor range is 94.800 to 93.000. Its retracement zone at 93.900 to 94.110 is the first upside target. Overtaking 94.110 could trigger the start of a surge to the upside.

The first major upside target is the short-term 50% level at 94.765. This forms a resistance cluster with the 94.800 main top.


Short-Term Outlook

Based on Friday’s price action, the early direction on Monday is likely to be determined by trader reaction to the minor 50% level at 93.900.

Bullish Scenario

Overtaking 93.900 is likely to trigger a quick rally into a series of levels at 93.975, 94.090 and 94.110. Look for a possible acceleration to the upside over 94.110.

Bearish Scenario

A sustained move under 93.900 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 93.275.

For a look at all of today’s economic events, check out our economic calendar.

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