U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 96.660, Weakens Under 95.950

The U.S. Dollar is inching lower against a basket of major currencies on Wednesday, mostly in reaction to a dip in U.S. Treasury yields. The limited price action suggests investors haven’t made up their minds yet on the potential impact of the Omicron coronavirus variant on the global economy. Mixed comments on the variant are likely the catalysts behind the tight, low-volume trading range.

At 09:19 GMT, December U.S. Dollar Index futures are trading 96.230, down 0.140 or -0.15%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund (UUP) ETF settled at $25.82, up $0.01 or +0.04%.

Economic news could drive the price action later in the session. At 15:00 GMT, The JOLTS report on U.S. job openings should provide further evidence of a tightening labor market, potentially adding fodder for bets on earlier Fed tightening.

The U.S. Federal Reserve meets next week, with policymakers strongly suggesting that an increase in the pace of stimulus tapering is likely, which would set up the possibility of earlier rate hikes.

Money markets are currently fully priced for a quarter point rate increase by June.

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 move through 95.525 will change the minor trend to down. This will shift momentum to the downside.

The index is currently straddling a minor pivot at 96.235. Resistance is a pivot at 96.500. The support pivot is 95.955.

The more important support levels are layered at 95.405, 95.105 and 94.670.

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 96.235.

Bullish Scenario

A sustained move over 96.235 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 96.500.

Taking out 96.590 will indicate the buying is getting stronger. Overcoming 96.660 could trigger an acceleration into the main top at 96.940.

Bearish Scenario

A sustained move under 96.235 will signal the presence of sellers. This could trigger a fast break into 95.955. This price is a potential trigger point for an acceleration into 95.540 to 95.405.