U.S. Dollar Index Futures (DX) Technical Analysis – Safe-Haven Buying Underpinning GreenbackBased on the early price action and the current price at 98.550, 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 short-term pivot at 98.435.
The U.S. Dollar is trading mixed against a basic of major currencies early Monday with the safe-haven Japanese Yen and Swiss Franc combining to exert the most downside pressure.
Against the heavily-weighted Euro, the dollar is flat. However, it is trading stronger versus the British Pound and Canadian Dollar. The greenback is likely being underpinned by safe-haven buying due to renewed concerns over U.S.-China trade relations, and lower expectations of a Fed rate cut at the end of October.
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At 07:14 GMT, December U.S. Dollar Index futures are trading 98.550, up 0.062 or +0.06%.
Traders are saying there’s a general tone of uncertainty in the market as the U.S. and China gear up for the start of trade talks in Washington on October 10-11. The markets weren’t expecting a trade deal to emerge from the talks, but they were looking for progress toward an agreement.
However, this outlook was dampened over the weekend when Bloomberg reported that Chinese officials are signaling they are increasingly reluctant to agree to a broad deal pursued by U.S. President Donald Trump. This drove down demand for risky assets with investors seeking shelter in the U.S. Dollar, Swiss Franc and Japanese Yen.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum shifted to the downside on October 1 with the formation of a closing price reversal top at 99.305.
A trade through 99.305 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 97.560.
The short-term range is 97.560 to 99.305. Its retracement zone at 98.435 to 98.230 is acting like support. This zone stopped the selling on October 3 at 98.300.
The intermediate range is 96.600 to 99.305. Its retracement zone at 97.955 to 97.635 is also potential support.
Daily Technical Forecast
Based on the early price action and the current price at 98.550, 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 short-term pivot at 98.435.
A sustained move over 98.435 will indicate the presence of buyers. The first target is an uptrending Gann angle at 98.560. This is a potential trigger point for an acceleration into a short-term downtrending Gann angle at 98.805. Taking out this angle could trigger another surge into the downtrending Gann angle at 99.055.
A failure to hold 98.435 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at 98.230. Taking out this level could trigger a break into the uptrending Gann angle at 98.060.