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James Hyerczyk
U.S. Dollar Index

The U.S. Dollar is trading lower against a basket of major currencies with the selling being driven primarily by a surge in the Euro after European Central Bank policymakers kept policy unchanged and expressed little concern about the value of the single-currency or the low inflation in the Euro Zone.

At 14:33 GMT, the December U.S. Dollar Index is trading 92.760, down 0.484 or -0.52%.

European Central Bank President Christine Lagarde said on Thursday that data suggested a “strong rebound” in the Euro area, with the economy contracting less than expected this year.

Earlier in the session, the European Central Bank left its ultra-easy policy unchanged on Thursday, keeping borrowing costs at a record low and promising copious asset purchases well into next year as the bloc works through its pandemic-induced recession.

Also contributing to the dollar’s weakness was a report that showed weekly jobless claims were worse than expected last week amid a plodding climb for the U.S. labor market from the damage inflicted by the coronavirus pandemic.

The Labor Department reported 884,000 first-time filings for unemployment insurance, compared to the 850,000 expected by economists surveyed by Dow Jones.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of a minor closing price reversal top and the subsequent confirmation of the potentially bearish chart pattern earlier today.

A trade through 93.640 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 91.750 will change the main trend to down.

On the downside, the major support is the long-term Fibonacci level at 91.760.

The short-term range is 93.975 to 91.750. The index is currently straddling its 50% level at 92.865.

The minor range is 91.750 to 93.640. Its retracement zone at 92.695 to 92.470 is the next downside target.


Short-Term Outlook

Trader reaction to the minor retracement zone at 92.695 to 92.470 will determine the near-term direction of the December U.S. Dollar Index.

Bullish Scenario

Buyers are going to try to establish support at 92.695 to 92.470. They will be trying to form a potentially bullish secondary higher bottom.

Bearish Scenario

Taking out the minor Fibonacci level at 92.470 will indicate the selling pressure is getting stronger. This will likely form another main top at 93.640 with 91.750 the primary downside target.

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

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