U.S. Dollar Index (DX) Futures Technical Analysis – Traders Bracing for US Housing, Consumer Confidence Data

The U.S. Dollar is trading slightly lower on Tuesday following yesterday’s choppy session. The greenback began the week edging higher following another suspected foreign exchange intervention by Japan, but gave back those gains after Rishi Sunak was picked to become Britain’s third prime minister and the Euro bounced back.

At 02:46 GMT, December U.S. Dollar Index futures are trading 111.805, down 0.104 or -0.09%. On Monday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $30.14, up $0.03 or +0.10%.

Driving the Price Action…

The week began with the Yen hitting a low of 149.70 per dollar overnight before surging to a high of 145.28 within minutes in a move that suggested the Bank of Japan (BOJ), acting for Japan’s Ministry of Finance, had stepped in again.

The dollar held steady after the suspected BOJ intervention, but weakened, briefly turning negative, after S&P flash PMI data showed U.S. business activity contracting for a fourth straight month in October, the latest evidence of an economy softening in the face of high inflation and rising interest rates.

Finally, the Sterling see-sawed after Sunak, the country’s former chancellor, was appointed leader of Britain’s Conservative Party, clearing the way for him to become the next prime minister.

Looking Ahead…

The U.S. housing market will be at the forefront early Tuesday with the Home Price Index (HPI) and the S&P/CS Composite-20 HPI expected to come in lower than the previous month. The housing numbers are weakening because of rapidly rising mortgage rates.

The housing data will be followed by the CB Consumer Confidence and Richmond Manufacturing Index reports. The Consumer Confidence report will be closely watched especially with the Fed scheduled to meet on November 1-2. It is expected to show a decline from 108.0 to 105.9 due to high inflation and rising interest rates.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend turned down on Monday. A trade through 111.335 will signal a resumption of the downtrend. A move through 113.835 will change the main trend to up.

The minor range is 109.965 to 113.850. The index is currently testing its retracement zone at 111.908 to 111.449.

The short-term range is 107.450 to 114.745. Its 50% level at 111.098 is additional support.

Daily Swing Chart Technical Forecast

Trader reaction to the minor 50% level at 111.908 is likely to determine the direction of the December U.S. Dollar Index on Tuesday.

Bullish Scenario

A sustained move over 111.908 will indicate the presence of buyers. The first upside target is a minor pivot at 112.585. Overtaking this level could fuel a further rally into a pair of main tops at 113.835 to 113.850.

Bearish Scenario

A sustained move under 111.908 will signal the presence of sellers. The next two downside targets come in at 111.449 and 111.098. The latter is a potential trigger point for an acceleration to the downside with the main bottom at 109.965 the next major target.