U.S. Dollar Index (DX) Futures Technical Analysis – Trapped Between Pair of 50% Levels at 92.655 and 93.225

The U.S. Dollar is trading flat against a basket of major currencies on Friday as investors express caution over expectations about a COVID-19 vaccine that is unlikely to avert a grim winter in the United States and Europe as the coronavirus’ latest wave strengthens.

At 05:49 GMT, December U.S. Dollar Index futures are trading 92.960, up 0.004 or +0.00%.

On Thursday, currencies found no new direction from assorted comments by central bankers from the U.S., Europe and Britain at midday on a panel. They welcomed the encouraged results in vaccine trials but stressed that the economic outlook remains uncertain.

Federal Reserve Chairman Jerome Powell said the country’s economic outlook remained uncertain. “With the virus spreading, the next few months could be challenging,” he said.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on November 9.

The main trend will change to up on a trade through 94.330. A move through 92.120 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor range is 92.120 to 93.190. Its 50% level at 92.655 is support. Trader reaction to this level should set the tone on Friday.

The short-term range is 94.330 to 92.120. Its retracement zone at 93.225 to 93.490 is resistance. Overtaking this area could spike prices higher.

Daily Swing Chart Technical Forecast

Thursday’s inside move suggests investor indecision and impending volatility.

The price action this week indicates that the direction of the December U.S. Dollar Index on Friday is likely to be determined by trader reaction to the 50% level at 92.655.

Bullish Scenario

Holding above 92.655 will indicate the presence of aggressive counter-trend buyers. If this creates enough upside momentum then look for the rally to possibly extend into the resistance cluster at 93.190 to 93.225.

Overtaking 93.225 could spike the index into 93.490. This is the trigger point for a potential acceleration to the upside.

Bearish Scenario

The inability to breakout over 93.225 will be the first sign of selling pressure, while a drive through 92.655 could trigger an acceleration to the downside with 92.120 the next likely downside target.

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