U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 93.825, Weakens Under 93.430

The U.S. Dollar is trading lower against a basket of major currencies with the Euro, British Pound, Canadian Dollar and Swiss Franc edging higher and the Japanese Yen posting a slight loss.

Despite the early weakness, the dollar index is still hovering slightly above its lowest level in a month reached last week as investors weigh the effect on inflation on the relative pace of looming rate hikes – with a wary eye on U.S. growth data and a European Central Bank (ECB) meeting later in the week.

At 05:59 GMT, December U.S. Dollar Index futures are trading 93.525, down 0.100 or -0.11%.

On Thursday, U.S. growth data is expected to show a slowdown in growth as consumer confidence has faltered, but a surprise on either side might have consequences for the interest rate outlook.

Also on the Thursday, the Bank of Japan and the European Central Bank meet. Neither are expected to adjust policy, but in Europe, market gauges of projected inflation are at odds with the bank’s guidance.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum may be getting ready to shift to the upside following last Thursday’s closing price reversal bottom.

A trade through 93.475 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through 93.785 will confirm the closing price reversal bottom, which could trigger the start of a 2 to 3 day correction. It will also shift momentum to the upside.

The minor trend will change to up on a trade through 94.175. This will confirm the shift in momentum. The main trend will change to up on a move through 94.570.

On the downside, potential support levels drop in at 93.430, 93.255, 93.160 and 92.940.

On the upside, potential resistance levels come in at 93.580, 93.770, 93.825 and 94.020.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Monday is likely to be determined by trader reaction to 93.580.

Bearish Scenario

A sustained move under 93.580 will indicate the presence of sellers. The first downside targets are 93.475 and 93.430.

Taking out 93.430 could extend the selling into 93.255 to 93.160.

The trigger point for an acceleration to the downside is 93.940.

Bearish Scenario

A sustained move over 93.580 will signal the presence of buyers. The first upside target is a resistance cluster at 93.770 – 93.785. This is followed closely by 93.825.

Overcoming 93.825 could trigger a surge into 94.020. This is followed closely by the minor top at 94.175.

The minor top at 94.175 is a potential trigger point for an acceleration to the upside with 94.570 the next target.