U.S. Dollar Index (DX) Futures Technical Analysis – Big Test for Counter-Trend Buyers at 93.190 – 93.225

The U.S. Dollar is trading nearly flat against a basket of major currencies early Thursday as investors adjusted some of their bullish expectations about a COVID-19 vaccine, tempering a recent rally in risk assets but keeping enough confidence to support the greenback against the safe-haven currencies. Against its key components, the dollar is edging slightly lower against the Japanese Yen and marginally higher versus the Euro.

At 03:21 GMT, December U.S. Dollar Index futures are trading 92.965, down 0.059 or -0.06%.

The Japanese Yen, a popular vehicle for bets against the dollar, is now at 105.410, some 2% below an eight-month high it hit against the greenback last week, when Joe Biden’s lead in the U.S. election spurred a wave of dollar selling.

The Euro, which represents about 57% of the U.S. Dollar Index, slipped overnight after the European Central Bank said it would focus on bond buying and cheap loans to boost pandemic-wrecked economies, while the British Pound edged lower as Brexit trade talks dragged on.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of a closing price reversal bottom on Monday and its subsequent follow-through rally.

A trade through 92.120 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through 94.330 will change the main trend to up.

The new minor range is 92.120 to 93.190. Its 50% level or pivot at 92.655 is support.

The short-term range is 94.330 to 92.120. Its retracement zone at 93.225 to 93.490 is the next upside target. Since the main trend is down, sellers could come in on the first test of this area. Taking out the upper level, however, could trigger an acceleration to the upside.

Daily Swing Chart Technical Forecast

The index is currently trading between a pair of 50% levels at 92.655 and 93.225. Trader reaction to these levels will likely determine the near-term direction of the December U.S. Dollar Index futures contract.

Bullish Scenario

A sustained move over 93.225 will signal the presence of buyers. This could trigger a rally into the Fibonacci level at 93.490. This is a potential trigger point for an acceleration to the upside with 94.330 the next potential upside target.

Bearish Scenario

The inability to overtake 93.225 will indicate the presence of sellers. This could trigger a break into 92.655. If counter-trend buyers fail to defend this level then look for an acceleration to the downside with the next major target the November 9 bottom at 92.120.

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