U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 96.020, Strengthens Over 96.480

The U.S. Dollar is trading lower against a basket of major currencies at the mid-session on Wednesday as traders awaited the release of the minutes from the Federal Reserve’s December Meeting. Growing expectations of a rate hike by policymakers as early as March fueled a rally into a two-week high on Tuesday.

At 17:31 GMT, March U.S. Dollar Index futures are trading 95.970, down 0.304 or -0.32%. The Invesco DB US Dollar Index Bullish ETF (UUP) is at $25.70, down $0.11 or -0.43%.

The minutes, due at 19:00 GMT, could underscore U.S. policymakers’ new found sensitivity to inflation and their readiness to act. Markets have ramped up bets on a quarter percentage point rate increase by March and fully priced one in by May.

On the data front, data compiled by ADP showed U.S. private payrolls grew by 807,000 in December. That’s more than double the Dow Jones estimate of 375,000. To be sure, the survey covers through the middle of December, before the worst of omicron COVID-19 spread.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 96.475 will signal a resumption of the uptrend. A move through 95.575 will change the main trend to down.

The index is currently trading on the weak side of three 50% levels at 96.025, 96.200 and 96.320, making them resistance.

On the downside, the nearest support is 95.360, followed by the short-term retracement zone at 95.050 to 94.610.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index into the close on Wednesday is likely to be determined by trader reaction to 96.025.

Bearish Scenario

A sustained move under 96.020 will indicate the presence of sellers. This could trigger an acceleration to the downside with 95.575 the next target. Taking out this level could extend the selling pressure into 95.360.

Bullish Scenario

A sustained move over 96.030 will signal the presence of buyers. This could lead to a labored rally with 96.200 and 96.315 the first two upside targets.

Taking out 96.315 will indicate the buying is getting stronger with 96.475 the next target. This is a potential trigger point for an acceleration to the upside with the next targets coming in at 96.670 and 96.895.