U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 92.510 Sets the Tone

The U.S. Dollar hit a four-week high against a basket of major currencies on Wednesday as concerns over a third COVID-19 wave in Europe, potential U.S. tax hikes and escalating tensions between the West and China sapped risk appetite. The news is offsetting a dip in U.S. Treasury yields.

At 10:00 GMT, June U.S. Dollar Index futures are trading 92.435, up 0.088 or +0.10%.

Helping to boost the index is a weaker Euro, which hit a four-month low after Germany extended a lockdown and urged its citizens to stay at home during the Easter holiday.

Worries over the pace of the pandemic recovery were heightened after a U.S. health agency said the AstraZeneca Plc vaccine may have included outdated information in its data.

Later today, Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell are scheduled to testify to the Senate Banking Panel. On Tuesday, the flight to safety into the greenback received an additional boost when Yellen told lawmakers that future tax hikes will be needed to pay for infrastructure projects and other public investments.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the 92.530 main top. A trade through 91.290 will change the main trend to down.

On the upside, potential resistance is a Fibonacci level at 92.510.

On the downside, potential support is a series of retracement levels at 92.200, 91.870 and 91.620.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the June U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 92.510.

Bullish Scenario

A sustained move over 92.510 will indicate the presence of buyers. Taking out the intraday high at 92.615 will indicate the buying is getting stronger with the November 23, 2020 main top at 92.690 the next likely upside target. This is a potential trigger point for an acceleration to the upside with the November 11, 2020 main top at 93.135 the next major upside target.

Bearish Scenario

A sustained move under 92.510 will signal the presence of sellers. Turning lower for the session will indicate the selling is getting stronger. This could trigger a break into 92.200. This is a potential trigger point for an acceleration into a pair of 50% levels at 91.870 and 91.620.