U.S. Dollar Index (DX) Futures Technical Analysis – Overcoming 94.020 Could Increase Momentum into the Close

The U.S. Dollar Index is trading higher late Tuesday after confirming yesterday’s potentially bullish closing price reversal bottom. Following a prolonged move down in terms of price and time, the index is moving higher on position-squaring and profit-taking as investors prepare for news from the Bank of Canada (BOC) on Wednesday, and the Bank of Japan (BOJ) and the European Central Bank (ECB) on Thursday. Next week brings meetings of the U.S. Federal Reserve, and Bank of England (BOE).

At 05:50 GMT, December U.S. Dollar Index futures are trading 93.955, up 0.146 or +0.16%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher following the confirmation of yesterday’s closing price reversal bottom.

A trade through 94.570 will change the main trend to up. A move through 93.475 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through 94.175 will change the minor trend to up. This will confirm the shift in momentum.

The index is currently trading on the strong side of a minor pivot at 93.825 and a minor retracement zone at 93.770 to 93.580.

Additional support is a series of retracement levels at 93.430, 93.255 and 93.160.

The short-term range is 94.570 to 93.475. Its 50% level at 94.020 is the next upside target.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index into the close on Tuesday is likely to be determined by trader reaction to 94.020.

Bullish Scenario

A sustained move over 94.020 will indicate the buying is getting stronger late in the session. If this move creates enough upside momentum then look for a surge into the minor top at 94.175.

Taking out 94.175 will change the minor trend to up and could trigger an acceleration to the upside with the main top at 94.570 the primary upside target.

Bearish Scenario

A sustained move under 94.020 will signal that sellers have come in to stop the intraday rally. If this move creates enough downside momentum then look for a test of 93.825, followed by 93.770.

If 93.770 fails then look for the selling to extend into 93.580, followed by the main bottom at 93.475.