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James Hyerczyk
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US Dollar Index

The U.S. Dollar Index is trading lower against a basket of major currencies at the mid-session on Wednesday. The greenback is being pressured by dampened expectations of any early tapering by the Federal Reserve of its massive stimulus at next week’s policy meeting.

The catalyst behind the tempered tapering expectations is Tuesday’s softer-than-expected U.S. consumer inflation data (CPI). Tapering tends to benefit the dollar as it suggests the Fed is one step closer toward tighter monetary policy. With the Fed likely to wait on tapering until at least November, dollar bulls are cashing in after a recent rally.

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At 17:12 GMT, December U.S. Dollar Index futures are trading 92.460, down 0.154 or -0.17%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday just one day after it turned up on Monday.

A trade through 92.290 will signal a resumption of the downtrend. A move through 92.880 will change the main trend to up.

The short-term range is 93.710 to 91.935. Its retracement zone at 92.825 to 93.035 is resistance. This zone stopped the rally at 92.880 on Monday.

The primary downside target and value area is 91.630 to 91.140. We expect buyers to come in on a test of this area.

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Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index into the close is likely to be determined by trader reaction to 92.585.

Bearish Scenario

A sustained move under 92.585 will indicate the presence of sellers. The first downside target is 92.290. This level is a potential trigger point for an acceleration to the downside with the 91.935 main bottom the next likely target, followed by a major 50% level at 91.630.

Bullish Scenario

A sustained move over 92.585 will signal the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into the short-term 50% level at 92.825, followed by the main top at 92.880 and the short-term Fibonacci level at 93.050.

For a look at all of today’s economic events, check out our economic calendar.
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