U.S. Dollar Index (DX) Futures Technical Analysis – Early Strength Over 93.820, Early Weakness Under 93.770
The U.S. Dollar fell against a basket of major currencies on Wednesday with the pressure generated primarily by a sharp rise in the Canadian Dollar after surprising statement from the Bank of Canada fueled a burst of volatility in a relatively thin market.
The Canadian Dollar swung wildly in both directions after the Bank of Canada signaled that it could hike interest rates sooner than it had thought. U.S. Dollar traders are now bracing for a reaction to Thursday’s Bank of Japan and European Central Bank policy announcements. The BOJ is expected to leave policy unchanged, while the ECB could come across as dovish.
At 20:27 GMT, December U.S. Dollar Index futures are trading 93.865, down 0.076 or -0.08%.
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 the closing price reversal bottom on October 25.
A trade through 94.570 will change the main trend to up. A move through 93.465 will signal a resumption of the downtrend.
The minor trend is up. This confirms the shift in momentum. A trade through the minor tops at 94.015 and 94.175 will indicate the minor trend is getting stronger. A move through 93.465 will change the minor trend to down.
The short-term range is 94.570 to 93.465. Its 50% level at 94.017 is resistance.
The initial support is 93.820 and 93.770. This is followed by 93.580 and 93.430.
The direction of the December U.S. Dollar into the close and early Thursday is likely to be determined by trader reaction to 93.820 and 93.770.
A sustained move over 93.820 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into 94.015 – 94.017.
Taking out 94.017 will indicate the buying is getting stronger with 94.175 the next target. This price is a potential trigger point for an acceleration to the upside with 94.570 the next target.
A sustained move under 93.770 will signal the presence of sellers. If this generates enough downside momentum then look for a break into 93.580. If this fails then look for the selling to possibly extend into 93.465, followed closely by 93.430.