U.S. Dollar Index (DX) Futures Technical Analysis – Selling Likely to Accelerate Under 92.460 into 91.750

The U.S. Dollar is trading steady-to-better against a basket of major currencies early Friday after getting crushed the previous session. The move could be the calm before another storm as traders anticipate more losses as a contentious U.S. presidential election diminished hopes for large stimulus to support the economy at any time soon.

At 03:20 GMT, December U.S. Dollar Index futures are trading 92.650, up 0.134 or +0.14%.

The price action indicates speculators are waging that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending they have been pushing.

A large decline in long-term Treasury yields due to expectations for less fiscal spending, combined with a rally in equities and other risk assets, has placed the dollar under consistent selling pressure that is likely to continue.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. The trend turned up last week when uncertainty ahead of the election drove investors into the safe-haven greenback. Now that the uncertainty has been lifted somewhat, these hedges are no longer needed.

A trade through 92.460 will change the main trend to down. A move through 94.330 will signal a resumption of the uptrend.

The short-term range is 91.750 to 94.795. Its 50% level at 93.275 is new resistance.

Daily Swing Chart Technical Forecast

The momentum is clearly to the downside so if it continues we expect sellers to take out 92.460. This should trigger another acceleration into the September 1 main bottom at 91.750.

We also expect sellers to return on a rally into the 50% level at 93.275.

Don’t be surprised by a short-covering rally. The two day break was likely fueled by long liquidation. A lot of traders don’t like to sell weakness so they’ll play for a rally into resistance.