U.S. Dollar Index (DX) Futures Technical Analysis – Inching Higher Ahead of US ISM Services PMI Report

The U.S. Dollar is edging higher against a basket of major currencies on Monday after shrugging off earlier weakest. The dollar opened the week lower, hovering just above a 5-month low, as traders discounted Friday’s stronger than anticipated U.S. jobs report and shifted their focus toward the growing hopes of China easing its COVID-restrictions and reopening the economy.

At 11:22 GMT, December U.S. Dollar Index futures are trading 104.650, up 0.150 or +0.14%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.22, down $0.04 or -0.14%.

The greenback recovered from the earlier weakness and turned higher as U.S. Treasury yields rose. The choppy, two-sided trade is being attributed to trader indecision tied to last week’s jobs reports and general uncertainty ahead of today’s ISM Non-Manufacturing Purchasing Managers’ Index (PMI) report.

Last Friday’s U.S. Non-Farm Payrolls report came in hotter-than-expected with the headline number exceeding estimates as well as the average hourly wages portion of the report. Both elements of the report raised doubts about whether the Fed could follow-through with its expected plan to raise rates by 50 basis points instead of 75 basis points.

Today’s November ISM PMI report for non-manufacturing industries, due to be released at 15:00 GMT, is expected to come in at 53.7, indicating a slowdown of growth from October’s reading of 54.4.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 103.935 will signal a resumption of the downtrend. A move through 107.150 will change the main trend to up.

The nearest resistance is the minor pivot at 105.543. The nearest support is the June 16 main bottom at 102.950.

Daily Swing Chart Technical Forecast

Trader reaction to 104.500 is likely to determine the direction of the December U.S. Dollar index on Monday.

Bullish Scenario

A sustained move over 104.500 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the minor pivot at 105.543. Overtaking this level will indicate the short-covering is getting stronger with the main top at 107.150 the next target.

Bearish Scenario

A sustained move under 104.500 will signal the presence of sellers. Taking out 103.935 will indicate the selling pressure is getting stronger with the main bottom at 102.950 the next target. This is a potential trigger point for an acceleration into a support cluster at 101.125 to 101.090.