U.S. Dollar Index Futures (DX) Technical Analysis – Retracement Zone at 98.095 to 98.380 Controlling Near-Term Direction

The U.S. Dollar is trading flat against a basket of major currencies after surging to just below its high for the month on Friday. A more optimistic outlook for a U.S.-China trade deal is driving up U.S. Treasury yields, helping to make the dollar a more attractive asset. Better-than-expected U.S. economic data is one catalyst behind the move.

At 05:26 GMT, December U.S. Dollar Index futures are trading 98.180, up 0.004 or +0.00%.

The greenback was also supported after data showed U.S. factory and services activity quickened in November in a sign of continued resilience of the U.S. economy.

Traders have to be careful chasing the index in either direction because of low pre-holiday volume and volatility. Thursday is a U.S. bank holiday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.300 will signal a resumption of the uptrend. The main trend will change to down on a move through 97.550.

The main range is 99.305 to 96.885. Its retracement zone at 98.100 to 98.380 is currently being tested. This zone is potential resistance. It stopped a rally on November 13 at 98.300.

The short-term range is 96.960 to 98.300. Its retracement zone at 97.630 to 97.470 is support. This zone stopped the selling on November 1 at 96.960.

The major support zone is 97.140 to 96.630. It helped form two bottoms at 96.960 and 96.885.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 98.180, the direction of the December U.S. Dollar Index the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 98.100.

Bullish Scenario

A sustained move over 98.100 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for the rally to possibly extend into the main top at 98.300, followed by the Fibonacci level at 98.380.

Bearish Scenario

A sustained move under 98.095 will signal the presence of sellers. This could trigger a break into a short-term 50% level at 97.885. If this fails as support then look for the selling to possibly extend into the short-term 50% level at 97.630, followed by the main bottom at 97.550.