U.S. Dollar Index (DX) Futures Technical Analysis – Trigger Point for Upside Breakout is 91.255 Pivot

The U.S. Dollar is trading higher against a basket of major currencies late Tuesday, taking a pause from a selling spree that drove it to its lowest level in more than 2-1/2 years last week. Traders may be getting clues from the equity markets, which are struggling at record highs.  Helping to boost the index were the heavily weighted Euro, followed by the volatile British Pound and safe-haven Japanese Yen – all of which lost ground to the U.S. Dollar.

At 19:53 GMT, December U.S. Dollar Index futures are trading 90.935, up 0.146 or +0.16%.

Influencing the Euro was upbeat economic sentiment data from Germany. German investor sentiment soared more than expected in December on expectations that vaccines against the coronavirus would boost the outlook for Europe’s largest economy.

Tuesday’s big mover was the British Pound, which sank against both the dollar and the Euro. With only three weeks to go for Britain to fully complete its exit from the European Union, leaders have failed to narrow differences on a post-Brexit trade deal.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 90.470 will signal a resumption of the downtrend. The main trend will change to up on a move through 93.190.

The minor trend is also down. A trade through 92.040 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 92.040 to 90.470. Its 50% level at 91.255 is resistance. This level stopped the rally on Monday.

Resistance is the long-term Fibonacci level at 91.815.

Short-Term Outlook

Today’s inside range suggests investor indecision and impending volatility. Over the long-run, the dollar is expected to trend lower in 2021 and continue moving lower as economies reopen and also because there’s going to be a lot of demand for emerging market currencies as the global market recovers from the devastation caused by the pandemic.

Over the short-run, however, there is room to the upside for a minor short-covering rally. The market may be trying to form a support base just above the July 9, 2018 main bottom at 90.460. If this price holds, we could see another attempt to breakout over the minor 50% level at 91.255, but don’t expect too much upside pressure unless buyers can overcome 91.815.

Meanwhile, a failure to hold 90.460 could trigger another acceleration to the downside with the July 7, 2018 main bottom at 89.790 the next major downside target.

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