U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 93.900, Strengthens Over 94.110

The U.S. Dollar rose against a basket of major currencies on Thursday as investors shied away from risky assets, increasing the greenback’s appeal as a safe-haven asset. The catalysts behind the rally were fears that a resurgence in coronavirus cases and a lack of more U.S. fiscal stimulus would hobble the world economy.

On Thursday, the December U.S. Dollar settled at 93.864, up 0.498 or +0.53%.

An unexpected rise in the U.S. weekly jobless claims figures further reinforced concerns that the U.S. economy may sputter if the government does not act soon to shore up growth, especially in the face of a spike in COVID-19 cases in Europe.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through 93.000 will change the main trend to down. A move through 94.800 will reaffirm the uptrend.

The minor trend is down. This is controlling the momentum. The minor trend will change to up on a move through 93.975. The uptrend will be reaffirmed on a trade through 94.090.

The first minor range is 91.750 to 94.800. Its 50% level at 93.275 is new support.

The second minor range is 94.800 to 93.000. Its retracement zone at 93.900 to 94.112 is the primary upside target. Trader reaction to this zone should set the near-term tone. Aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top. Trend-trading buyers are going to try to set up a breakout over 94.800 and a resumption of the uptrend.

Short-Term Forecast

The direction of the December U.S. Dollar Index on Friday is likely to be determined by trader reaction to the 50% level at 93.900.

Bullish Scenario

A sustained move over 93.900 will indicate the presence of buyers. This could trigger a quick rally into the Fibonacci level at 94.110. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 93.900 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the 50% level at 93.275.

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