James Hyerczyk
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U.S. Dollar Index

The U.S. Dollar rose against a basket of currencies on Wednesday helped by robust U.S. economic data and some light hedge buying tied to continued uncertainty about the outlook for a preliminary U.S.-China trade agreement.

On the data front, U.S. GDP picked up slightly in the third quarter, rather than slowing as initially forecast. Economists said a stronger pace of inventory accumulation and a less steep decline in business investment helped improve the number. Durable goods also increased by the most in nine months in October.

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Recent reports have shown that the United States and China have moved closer to agreement on the first phase of a trade deal, but the lack of concrete information is making some investors nervous, encouraging them to seek protection in the safe-haven U.S. Dollar.

At 21:05 GMT, December U.S. Dollar Index futures are trading 98.340, up 0.170 or +0.17%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out the November 13 main top at 98.300. The main bottom is 97.550. A trade through this level will change the main trend to down.

The main range is 99.305 to 96.885. The market is currently testing its retracement zone at 98.095 to 98.380. This zone is controlling the longer-term direction of the index.


Short-Term Outlook

The price action in November suggests that the key level to watch into the end of the year is the main Fibonacci level at 98.380. This level stopped the buying on November 13 and is currently being tested.

The chart pattern suggests that 98.380 is a potential trigger point for an acceleration to the upside.

The first upside target is a downtrending Gann angle at 98.665. This is followed by a minor top at 98.955 and another downtrending Gann angle at 98.985. This is the last potential resistance angle before the 99.305 main top.

Side Notes

Essentially, the longer-term direction of the December U.S. Dollar Index will be determined by trader reaction to the main retracement zone at 98.380 to 98.095.

Look for the upside bias to continue on a sustained move over 98.380 and for a downside bias to develop on a sustained move under 98.095.

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