U.S. Dollar Index (DX) Futures Technical Analysis – Sustained Move Under 92.655 Targets 92.120

The U.S. Dollar is trading lower on Tuesday against a basket of major currencies, especially the Euro and Japanese Yen, as a return of coronavirus restrictions in some U.S. states and worries about a smooth transition for President-elect Joe Biden offset optimism about a coronavirus vaccine.

At 11:42 GMT, December U.S. Dollar Index futures are trading 92.345, down 0.285 or -0.31%.

While optimism about a coronavirus vaccine may have lifted stocks, the move was mostly discounted by U.S. Dollar investors who chose to focus on the short-term surge in the number of new cases and reports of additional restrictions and lockdowns in the United States.

Pressuring the dollar index the most is the Euro, which climbed on optimism over another coronavirus vaccine. Traders don’t see a rally lasting given the challenges Europe faces in the middle of a second lockdown.

The British Pound also edged higher against the U.S. Dollar on media reports the U.K. could reach a post-Brexit trade agreement with the European Union by early next week.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.120 will reaffirm the downtrend. A move through 93.190 will change the main trend to up.

The minor range is 92.120 to 93.190. Its 50% level at 92.655 is resistance. Trading on the weak side of this level has put the index in a bearish position.

The short-term range is 94.330 to 92.120. Its retracement zone at 93.225 to 93.490 is also resistance. It is controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the December U.S. Dollar Index is likely to be determined by trader reaction to the pivot at 92.655.

Bearish Scenario

A sustained move under 92.655 will indicate the presence of sellers. This could trigger a break into the main bottom at 92.120. If this fails then look for the selling to possibly extend into 91.750.

Bullish Scenario

Overcoming 92.655 will signal the presence of buyers. If this creates enough momentum over the near-term then look for the rally to possibly extend into 93.190 to 93.225.