U.S. Dollar Index (DX) Futures Technical Analysis – Breakout Over 94.740 Puts 96.500 on the Long-Term Radar

The U.S. Dollar is edging higher against a basket of major currencies early Thursday after hitting its highest level in more than a year. The move was fueled by a surge in U.S. Treasury yields after the October U.S. consumer price index (CPI) report came in hotter-than-expected on Wednesday.

At 04:25 GMT, December U.S. Dollar Index futures are trading 94.920, up 0.082 or +0.09%.

The greenback jumped sharply on Wednesday, hitting its highest level since July 2020, after U.S. consumer prices surged to their highest level since 1990, fueling speculation that the Federal Reserve may raise interest rates sooner than expected.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the early high at 94.995 will signal a resumption of the uptrend. A move through 93.865 will change the main trend to down.

The former top at 94.740 is the nearest support area. If this rally is real then buyers should come in to defend this level.

The new minor range is 93.865 to 94.995. Its 50% level at 94.430 is another potential support level. Since the main trend is up, buyers should come in on a test of this level.

The main support is currently at 93.985 to 93.745. This zone will move up as the market moves higher.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 94.840.

Bullish Scenario

A sustained move over 94.840 will indicate the presence of buyers. Taking out 94.995 will indicate the presence of buyers. This could trigger another surge to the upside, but that will be determined by what U.S. Treasury yields do.

The breakout over 94.740 has put the next major target – 96.500 – on the radar. Check the long-term charts, there is no resistance until this level. Nonetheless, I don’t think the market will attack this price all at once.

Bearish Scenario

A sustained move under 94.840 will signal the presence of sellers. This could trigger a break into 94.740. Buyers could come in on a test of this level, but if it fails then look for the selling to possibly retrace into the nearest 50% level at 94.430. Since the main trend is down, buyers are likely to come in on a test of this level.