U.S. Dollar Index (DX) Futures Technical Analysis – Holding First Pivot at 93.775

The U.S. Dollar is trading flat against a basket of major currencies on Wednesday, posting a two-sided trade, as risk sentiment improved after U.S. government officials expressed hope that another stimulus package could be passed to help ease the economic impact of the coronavirus-induced recession.

The greenback fell against the Japanese Yen and the commodity-linked Canadian Dollar. The British Pound is also trading higher against the U.S. Dollar after recovering from early session weakness. The Euro is well-off its low, but still lower for the session.

At 19:38 GMT, December U.S. Dollar Index futures are trading 93.925, down 0.002 or 0.00%.

The dollar index dropped from an early high and turned negative for the session after Treasury Secretary Mnuchin made the initial positive announcement, but late in the session it is recovering after House Speaker Nancy Pelosi and Mnuchin failed to reach a coronavirus stimulus deal after meeting on Wednesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 94.795 will signal a resumption of the uptrend. A move through 92.755 will change the main trend to down.

The main range is 97.785 to 91.750. Its retracement zone at 94.770 to 95.480 is resistance.

The minor range is 92.755 to 94.795. Its 50% level at 93.775 is potential support. Wednesday’s low is 93.700.

The short-term range is 91.750 to 94.795. Its 50% level at 93.275 is another potential downside target.

Short-Term Outlook

Wednesday’s price action highlights the dollar’s sensitivity to risk appetite and trader sensitivity to stimulus talks.

Buyers are defending 93.775. If they pull their bids then look for the selling to extend into the next 50% level at 93.275. If that level fails then the uptrend becomes at risk.

So far the move to 93.775 is just a normal correction. If buyers can build a support base at this level then they’ll take another run at the 94.770 level, followed by 95.480.