U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 96.195, Strengthens Over 96.355

The U.S. Dollar is trading flat against a basket of major currencies early Thursday on relatively low volume as investors prepare for the long Christmas holiday weekend. This move follows a steep drop the previous session fueled by rallies in the Euro, Australian Dollar and other currencies.

Although Omicron cases are skyrocketing and investors are bracing for more volatility, risk appetite has improved enough this week to encourage investors to liquidate safe-haven positions in the greenback.

At 07:29 GMT, March U.S. Dollar Index futures are trading 96.060, up 0.001 or +0.00%. On Wednesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.74, down $0.11 or -0.43%.

Later today, investors will get the opportunity to react to a slew of U.S. economic data that could create some intraday volatility. The most important are the Core PCE Price Index, Personal Income, Personal Spending, Weekly Unemployment Claims and Revised University of Michigan Consumer Sentiment.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on December 15.

A trade through 96.895 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 95.500 will change the main trend to down.

The minor trend is also up. A trade through 95.810 will change the minor trend to down. This will confirm the shift in momentum.

The first minor range is 95.500 to 96.895. The index is currently trading on the weak side of its pivot at 96.200, making it resistance. The second minor range is 96.895 to 95.810. Its pivot at 96.355 is additional resistance.

If the main trend changes to down then look for the selling to continue into 95.360.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 96.200.

Bearish Scenario

A sustained move under 96.200 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to continue into 95.810. If this fails then the selling is likely to extend into the main bottom at 95.500, followed by the 50% level at 95.360.

Bullish Scenario

A sustained move over 96.200 will signal the presence of buyers. This should lead to a quick test of 96.360. Overtaking this level will indicate the buying is getting stronger. If this move creates enough upside momentum then look for a short-term rally with 96.895 the next major target.