U.S. Dollar Index (DX) Futures Technical Analysis – Next Downside Target July 2018 Bottom at 89.790

The U.S. Dollar is trading close at a two-year low against a basket of major currencies late Tuesday as progress toward a massive U.S. government spending bill and COVID-19 relief measures boosted spirits while investors awaited interest rate cues from the Federal Reserve’s final meeting of the year.

At 19:30 GMT, March U.S. Dollar Index futures are trading 90.455, down 0.200 or -0.22%.

Hopes that U.S. lawmakers can agree on a $1.4 trillion spending package and more clarity about COVID-19 vaccine distribution have whetted investors’ risk appetite, driving them away from safe-haven currencies.

The Fed, which began a two-day meeting on Tuesday, is expected to keep its key overnight rate pinned near zero and to signal it will stay there for years to come. Such moves would further boost investors’ confidence for risk-taking, analysts said. Many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.

The Euro held ground on Tuesday, hovering near a 2-1/2 year peak as investors looked past new restrictions to fight COVID-19 and focused on the likelihood of more U.S. stimulus that would weigh on the dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 90.345 will signal a resumption of the downtrend. The main trend changes to up on a move through 92.730.

The minor trend is also down. A trade through 91.150 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 90.380 to 91.150. Its 50% level at 90.750 is resistance.

The short-term range is 92.730 to 90.345. If the minor trend changes to up then look for the rally to possibly extend into its retracement zone at 91.540 to 91.820.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index into the close is likely to be determined by trader reaction to the pivot at 90.750.

Bearish Scenario

A sustained move under 90.750 will indicate the presence of sellers. Taking out yesterday’s low at 90.345 will indicate the selling is getting stronger. This could trigger an acceleration to the downside with the July 7, 2018 main bottom at 89.790 the next likely downside target.

Bullish Scenario

A sustained mover over 90.75 will signal the presence of buyers. This will be the first sign that momentum is getting ready to shift to the upside. This move could trigger a spike into the minor top at 91.150. Overtaking this level will confirm the shift in momentum with 91.540 the next likely upside target.