U.S. Dollar Index (DX) Futures Technical Analysis – Needs to Hold 93.035 Fib Level to Sustain Upside Momentum

The U.S. Dollar is holding steady against a basket of major currencies on Wednesday as investors focused on two major risk events – a default by Chinese property developer Evergrande and the expected pace of U.S. monetary policy tightening.

At 02:10 GMT, December U.S. Dollar Index futures are trading 93.170, down 0.030 or -0.03%.

Evergrande, once China’s top-selling property developer, is inching closer to a key deadline on Thursday when the firm is due to pay $83.5 million in interest relating to its March 2022 bond.

Trader are also focused on the U.S. Federal Reserve, which is expected to drop more hints on its future policy path, including when to start tapering its bond buying and when to start raising interest rates. The Fed will release its monetary policy statement at 18:00 GMT.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 93.445 will signal a resumption of the uptrend. A move through 92.290 will change the main trend to down.

The main range is 93.710 to 91.940. The index is currently trading on the strong side of its retracement zone at 93.035 to 93.870, making it potential support.

The minor range is 92.290 to 93.445. Its 50% level comes in at 92.870. This helps form a potential support cluster with the main 50% level at 92.825.

The short-term range is 91.940 to 93.445. Its retracement zone at 92.695 to 92.515 is the last major support area before a major bottom at 91.940.

Daily Swing Chart Technical Forecast

The early direction of the December U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 93.245.

Bullish Scenario

A sustained move over 93.245 will indicate the presence of buyers. If this move creates enough upside momentum then look for a retest of the minor top at 93.445. Taking out this level could trigger an acceleration to the upside with 93.710 the next major upside target.

Bearish Scenario

A sustained move under 93.245 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 93.035.

A failure to hold 93.035 will indicate the selling pressure is getting stronger. This could trigger a further break into the potential support cluster at 92.870 – 92.825.