U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to Pivot at 92.840 Could Set the Late Tone

The U.S. Dollar is edging lower against a basket of major currencies early Wednesday as investors square positions ahead of the release of the minutes from the Federal Reserve’s last policy meeting that could offer clues as to the timing of the central bank’s plan to begin tapering its monetary stimulus.

At 04:46 GMT, September U.S. Dollar Index futures are trading 93.095, down 0.050 or -0.05%.

The index has soared this week to its highest level since August 11 as investors have cut exposure to riskier currencies, mostly on coronavirus concerns. Today’s early price action suggests a slight easing of these concerns and firm equity prices are encouraging dollar index investors to book some profits.

Later today at 18:00 GMT, traders will be looking to minutes from the Federal Open Market Committee’s (FOMC) July meeting for clues around the timing or speed of plans to taper asset purchases. This could be the source of late session volatility.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 93.205 will reaffirm the uptrend.

A trade through 91.780 will change the main trend to down. If 93.205 is taken out then 92.470 will become a new main bottom and change in trend level.

The minor trend is also up. A trade through 92.470 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 93.205 to 92.470. The index is currently trading on the strong side of its pivot at 92.840, making it new support.

Additional support is a long-term Fibonacci level at 92.495. This is followed by short-term retracement zone support at 92.495 to 92.325.

Daily Swing Chart Technical Forecast

The current inside trading range suggests investor indecision and impending volatility.

If trend traders take control then look for a move into the main top at 93.205. Taking out this level could trigger a rally into the March 31 main top at 93.430. This is a potential trigger point for an acceleration to the upside with the November 2, 2020 main top at 94.070 the next major upside target.

If counter-trend sellers take over then look for a pullback into the pivot at 92.840. Buyers could come in on the first test of this level.

If 92.840 fails as support then look for the selling pressure to strengthen with the next target a potential support cluster at 92.495 to 92.470.