U.S. Dollar Index (DX) Futures Technical Analysis – Looking for Overnight Support between 93.775 and 93.275

The U.S. Dollar is trading lower against a basket of major at the mid-session on Tuesday, weighed down by currency flows in the options markets as well as for month end, with investors also capitalizing on recent gains in the greenback ahead of the first debate between two U.S. presidential candidates.

At 17:54 GMT, December U.S. Dollar Index futures are trading 93.930, down 0.372 or -0.39%.

“Today the market is mostly flows-driven, options-related and month-end flows that have pulled the dollar lower,” said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.

There were FX options-related flows that bet on the downside in the dollar versus the Japanese Yen as well as the upside on the Euro against the Japanese currency, Bregar said. The Euro/Yen options have pulled Euro/Dollar higher.

Some analysts also said investors may also be taking profits on recent dollar gains ahead of the first debate between President Donald Trump and Democratic challenger Joe Biden.

The greenback also added to losses, as investors felt a little more confident getting out of the safe-haven currency after data showed U.S. consumer confidence rebounded more than expected in September, as households’ views of the labor market improved.

Daily Swing Chart Technical Analysis

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

The main range is 97.785 to 91.750. Its retracement zone at 94.770 to 95.480 is the resistance zone. This zone stopped the rally at 94.795 last week.

The minor range is 92.755 to 94.795. Its 50% level at 93.775 is the first downside target.

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

Since the main trend is up, buyers could step in on the first test of these levels.

Short-Term Outlook

The downside momentum looks strong enough to take the index into the first pivot at 93.775. Watch for a technical bounce. If it fails then look for the selling to possibly extend into the next 50% level at 93.275.

The dollar could mount a recovery overnight if Trump is perceived as the winner of the debate and the news polls reflect this news. Therefore, watch the price action and read the order flow between 93.775 and 93.275.