U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 93.250 Pivot Sets the Tone

The U.S. Dollar is putting in a mixed-to-lower performance early Monday after hitting its highest level since August 20 last week after the Federal Reserve announced that it will likely begin to trim its monthly bond purchases as soon as November and flagged interest rate increases may follow sooner than expected, with half of Federal Open Market Committee members projecting a hike next year.

At 07:59 GMT, December U.S. Dollar Index futures are trading 93.275, down 0.060 or -0.06%.

While the Fed news is fueling a bullish response from U.S. Dollar traders, fading concerns around a potential Evergrande default are putting pressure on the greenback as investors ditch their safe-haven buys.

On Monday, traders will get the opportunity to react to a U.S. Durable Goods report, but the biggest response is likely to come from the slew of Federal Reserve member speeches.

Cleveland Fed President Loretta Mester said on Friday the central bank should start reducing its support for the economy in November and could start raising interest rates by the end of next year should labor markets continue to improve.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 92.965 will change the main trend to down. A move through 93.530 will negate a closing price reversal top and signal the resumption of the uptrend.

The minor range is 93.530 to 92.965. The index is currently trading on the strong side of its pivot at 93.250.

The intermediate range is 93.710 to 91.935. Its retracement zone at 93.030 to 92.825 is support.

The new short-term range is 91.935 to 93.530. If the main trend changes to down then its retracement zone at 92.735 to 92.545 will become the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to the pivot at 93.250.

Bullish Scenario

A sustained move over 93.250 will indicate the presence of buyers. If this move can generate enough upside momentum then look for a surge into 93.530. This is a potential trigger point for an acceleration to the upside with the main top at 93.710 the next likely target.

Bearish Scenario

A sustained move under 93.250 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 93.030, followed by the main bottom at 92.965.