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James Hyerczyk

The U.S. Dollar is trading higher against a basket of major currencies late Wednesday. The rally is being driven by increased demand for higher risk assets in the wake of a strong rally in U.S. equity markets, following the release of a bullish crude oil report. Traders are showing little reaction to another drop in U.S. Treasury yields.

At 20:10 GMT, September U.S. Dollar Index futures are trading 98.150, up 0.243 or +0.25%.

Near the close of the session, the lower-yielding Euro and British Pound are down 0.12% and 0.61% respectively. The commodity-linked Canadian Dollar is down 0.14%. The safe-haven Japanese Yen is off 0.38% and the Swiss Franc is lower by 0.06%.

Weak economic data weighed on the Euro. The British Pound fell after British Prime Minster Boris Johnson made a move to limit parliament’s opportunity to derail his Brexit plans. Safe-haven assets were weaker because a plunge U.S. crude oil inventories dampened fears of a slowing economy, at least temporarily. Gains were likely limited in the dollar index by a further inversion of the U.S. yield curve.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.455 will signal a resumption of the uptrend. The main trend will change to down on a trade through 96.980.

The minor trend is down. A trade through 97.370 will reaffirm the downtrend. This will also shift momentum to the downside.

The minor range is 98.455 to 97.370. Its 50% level or pivot at 97.915 is controlling the direction of the market.

The short-term range is 98.320 to 98.700. Its retracement zone at 97.510 to 97.230 is support. This zone stopped the selling at 97.370 on August 26.

The main range is 95.365 to 98.700. Its retracement zone at 97.035 to 96.640 is major support. This zone is controlling the near-term direction of the index.


Daily Swing Chart Technical Forecast

Based on Wednesday’s price action and the current price at 98.150, the direction of the September U.S. Dollar Index is likely to be determined by trader reaction to the pivot at 97.915.

Bullish Scenario

A sustained move over 97.915 will indicate the presence of buyers. If they can generate enough upside momentum then look for a rally into the last main top at 98.455. Taking out this level could trigger a further rally into the high of the year at 98.700.

Bearish Scenario

A sustained move under 97.915 will signal the presence of sellers. This could trigger an acceleration to the downside with the next targets the short-term 50% level at 97.510, the minor bottom at 97.370 and the short-term Fibonacci level at 97.230.

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