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James Hyerczyk
US Dollar Index

The U.S. Dollar finished lower against a basket of currencies on Monday. Most of the loss was attributed to a rebound in the Euro. Single-currency traders took advantage of a U.S. bank holiday and a Treasury market closing to take profits on recent short positions against the U.S. Dollar.

Also weighing on the dollar were doubts about whether Beijing and Washington can reach a potential trade agreement and roll back tariffs, and concerns over rising Hong Kong tensions. Both worries drove investors into the safe-haven Japanese Yen and Swiss Franc.

The British Pound also posted a strong gain against the U.S. Dollar as the risk of a hung parliament in UK elections eased slightly. In a significant boost for Prime Minister Boris Johnson ahead of the December 12 election, Brexit Party leader Nigel Farage said his party was standing down candidates in seats won by the Conservatives in 2107 and would instead focus on challenging anti-Brexit politicians.

On Monday, the December U.S. Dollar Index settled at 98.035, down 0.168 or -0.17%.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.245 will signal a resumption of the uptrend. A move through 96.960 will change the main trend to down.

The index is also up seven sessions from its last main bottom, which puts it in the window of time for a closing price reversal top or the start of a 2 to 3 pullback.

The main range is 99.305 to 96.885. Its retracement zone at 98.095 to 98.380 is currently being tested. Last week, it stopped the rally at 98.245.

The short-term range is 96.960 to 98.245. A normal 50% correction would take the index back to its 50% level at 97.605.


Daily Swing Chart Technical Forecast

Based on Monday’s close at 98.035, the direction of the December U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to the main 50% level at 98.095.

Bullish Scenario

A sustained move over 98.095 will indicate the presence of buyers. This could create the upside momentum needed to challenge last week’s high at 98.245 and the main Fibonacci level at 98.380. The latter is the trigger point for a potential acceleration to the upside.

Bearish Scenario

A sustained move under 98.095 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 97.065 over the near-term.

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