U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 94.570, Weakens Under 94.520

The U.S. Dollar is edging lower against a basket of major currencies early Wednesday after hitting a one-year high the previous session on expectations the U.S. Federal Reserve will announce a tapering of its massive bond-buying program next month, and as concerns over soaring energy prices also sent investors to the safe-haven greenback.

At 04:21 GMT, December U.S. Dollar Index futures are trading 94.355, down 0.164 or -0.17%.

Investors will watch U.S. Consumer Price Index (CPI) data on Wednesday and retail sales data on Friday for further clues as to when the Fed might begin winding down stimulus. A strong inflation print will solidify the chances of Fed tapering this year and likely lead to investors tightening up expectations for a rate hike.

The Federal Reserve will also release the minutes of its late September meeting at 18:00 GMT.

Dollar traders don’t expect many surprises in the minutes, but they are fairly confident that the CPI data will move Treasury yields and consequently the greenback.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 94.570 will reaffirm the uptrend. A move through 93.680 will change the main trend to down.

Wednesday marks the seventh day up from the last swing bottom, which puts the index inside the window of time for a potentially bearish closing price reversal top chart pattern.

The minor trend is also up. A trade through 93.925 will change the minor trend to down and shift momentum to the downside.

The minor range is 93.680 to 94.570. Its retracement zone at 94.125 to 94.020 is the primary downside target area.

The short-term range is 92.970 to 94.570. Its retracement zone at 93.770 to 93.580 is the best support area.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 94.520.

Bearish Scenario

A sustained move under 94.520 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 94.125 to 94.020.

Bullish Scenario

A sustained move over 94.520 will signal the presence of buyers. The first upside target is the main top at 94.570.

Taking out 94.570 will indicate the buying is getting stronger. This could trigger an acceleration into the September 25, 2020 main top at 94.740. This price is a potential trigger point for an acceleration to the upside.