U.S. Dollar Index (DX) Futures Technical Analysis – Erases Earlier Gains after Powell’s Hawkish Comments

The U.S. Dollar is trading lower against a basket of currencies late in the session on Wednesday, after the 10-year Treasury yield dipped following the latest remarks on future monetary policy moves from Federal Reserve Chairman Jerome Powell.

At 18:45 GMT, December U.S. Dollar Index futures are trading 106.365, down 0.403 or -0.38%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.64, down $0.20 or -0.69%.

“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in a speech at the Brookings Institution. “The time of for moderating the pace of rate increases may come as soon as the December meeting.”

Job Openings Data, GDP Figures Support Greenback

Earlier in the session, the dollar was boosted by a Labor Department report that showed job openings for October came in at 10.33 million, slightly less than a 10.4 million FactSet estimate.

Additionally, a revision to the gross domestic product reading from the Bureau of Economic Analysis showed the economy was stronger than previously thought. Third-quarter GDP increased at a 2.9% annual rate, higher than the 2.6% figure reported in the first estimate.

In other news, processing firm ADP reported that private hiring fell sharply in November and came in below expectations.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending a little higher.

A trade through 105.155 will reaffirm the downtrend. A move through 107.895 will change the main trend to up.

On the upside, the resistance is a pair of Fibonacci levels at 107.780 and 108.197. On the downside, the major target is the August 10 main bottom at 104.150.

The minor range is 105.155 to 107.895. Its pivot is 106.525.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at 106.525 is likely to determine the direction of the December U.S. Dollar Index into the close on Wednesday.

Bearish Scenario

A sustained move under 106.525 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 105.255 – 105.155.

Bullish Scenario

A sustained move over 106.525 will signal the presence of buyers. This could trigger a late session short-covering rally into 107.150, followed by the resistance cluster at 107.780 – 107.895.