U.S. Dollar Index (DX) Futures Technical Analysis – Testing Long-Term 50% Level at 96.500 with 98.230 on Radar
The U.S. Dollar jumped to a multi-year high against a basket of major currencies on Monday after Federal Reserve Chair Jerome Powell was nominated for a second four-year term by President Joe Biden. The rally was also driven by safe-haven buying tied to COVID-19 related lockdowns in Europe.
At 20:22 GMT, December U.S. Dollar Index futures are trading 96.530, up 0.502 or +0.52%.
The heavily weighted Euro provided the biggest boost to the index. It was dragged lower as concerns grew over new COVID-19 restrictions in Europe, with Austria entering another full lockdown and Germany considering following suit.
Dollar bulls liked the nomination of Powell because it means there will be continuity at the Federal Reserve especially at a time when policymakers are expected to consider a faster pace of stimulus tapering and an earlier than expected rate hike.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through the intraday high at 96.545 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 also shift momentum to the downside.
The index is currently testing a long-term 50% level at 96.500.
On the downside, minor support comes in at 96.030 and 95.750.
Daily Swing Chart Technical Forecast
The direction of the December U.S. Dollar index into the close and early Tuesday is likely to be determined by trader reaction to 96.500.
A sustained move over 96.500 will indicate the buying is getting stronger. This could trigger another acceleration to the upside with 97.120 the first target, followed by a long-term Fibonacci level at 98.230.
A sustained move under 96.500 will signal the presence of sellers. This won’t change the trend, but it could trigger a short-term pullback into a pair of 50% levels at 96.030 and 95.750.