U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 96.655, Weakens Under 95.840

The U.S. Dollar is trading flat against a basket of major currencies early Friday as traders await the release of key U.S. inflation data later in the session.

On Thursday, the dollar edged higher against the majors as a warning from the International Monetary Fund’s (IMF) chief economist added to concerns about Omicron and tempered the appetite for currencies and other assets considered “risky.”

At 14:47 GMT, December U.S. Dollar Index futures are trading 96.185, down 0.067 or -0.07%. On Thursday, the Invesco DB US Dollar Index Bullish Fund (UUP) ETF settled at $25.79, up $0.09 or +0.35%.

The index is in a position to post its seventh consecutive weekly rise ahead of the CPI report, which is due at 13:30 GMT. Annual price gains of 6.8% are expected and any upside surprise will likely be interpreted as a case for a faster Federal Reserve taper and sooner interest rate rises.

Consumer confidence data is also due on Friday and if it holds up could portend even more price pressures ahead.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 96.940 will signal a resumption of the uptrend. A move through 93.865 will change the main trend to down.

The minor trend is also up. A trade through 95.525 will change the minor trend to down. This will shift momentum to the downside.

The first minor range is 95.525 to 96.940. The index is currently straddling its pivot at 96.235.

On the upside, the nearest resistance is a long-term 50% level at 96.500.

On the downside, the nearest support is a minor pivot at 95.955.

Additional support is a short-term 50% level at 95.405. The main support zone is 95.105 to 94.670.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Friday is likely to be determined by trader reaction to 96.235.

Bullish Scenario

A sustained move over 96.235 will indicate the presence of buyers. This could trigger a move into the pivot at 96.500, followed by a high at 96.655. The latter is a potential trigger point for an acceleration to the upside with the next major target the main top at 96.940.

The main top at 96.940 is another potential trigger point for a near-term rally into the long-term main top at 97.120.

Bearish Scenario

A sustained move under 96.235 will signal the presence of sellers. The first downside target is 95.955, followed by 95.840. The latter is a potential trigger point for an acceleration to the downside with 95.540, 95.525 and 94.405 the next potential targets.