U.S. Dollar Index (DX) Futures Technical Analysis – Main Trend Changes to Down on Stimulus Deal Hope
The U.S. Dollar weakened against a basket of major currencies on Tuesday, hitting a one-month low, as investors awaited the outcome of fiscal stimulus talks ahead of the upcoming U.S. presidential election and as coronavirus cases spiked in Europe.
Investors dumped the greenback for third straight session, touching its lowest level since September 21, as House Speaker Nancy Pelosi said she was optimistic Democrats could reach a deal with the Trump administration on additional COVID-19 relief that could get fiscal stimulus aid out by early next month.
On Tuesday, December U.S. Dollar Index futures settled at 93.051, down 0.378 or -0.40%.
Helping to drive the dollar index lower was a surge in the Euro, which hit a one-month high.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the 93.000 main bottom. A move through 93.925 will change the main trend to up.
The short-term range is 91.750 to 94.795. The market is trading on the weak side of its 50% level at 93.275, adding further to the downside momentum.
Look for the selling pressure to continue as long as there are signs that policymakers are moving closer to a fiscal stimulus package.
Trading through 93.000 with conviction could lead to a test of the next main bottom at 92.755. Taking out this level will reaffirm the downtrend and could trigger an acceleration to the downside with the next target the September 1 main bottom at 91.750.
If there is any doubt that a deal will be reached by this weekend, we could see a short-covering rally. Overtaking 93.275 will indicate the move is getting stronger. Taking out 93.925 and changing the main trend to up will likely indicate that there will be no deal.
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