James Hyerczyk
U.S. Dollar Index

The U.S. Dollar is trading slightly higher against a basket of currencies on Tuesday. The move is being fueled by optimism over the progress of the U.S.-China trade talks and some light hedging ahead of the Brexit vote later today.

As far as the basket is concerned, a weaker Euro is providing most of the support. It is following through to the downside following yesterday’s technical reversal top. The British Pound is trading flat with the direction of the Sterling hinging upon the outcome of the Brexit vote. The Canadian Dollar is trading lower after reversing earlier gains. The dollar is trading higher versus the safe-haven Swiss Franc. However, the safe-haven Japanese Yen is edging a little higher.

At 11:13 GMT, December U.S. Dollar Index futures are trading 97.105, up 0.055 or +0.06%.

In the U.S. at 14:00 GMT, traders will get a chance to react to the latest data on Existing Home Sales and Richmond Manufacturing. The reports are not likely to have any impact on the dollar index since investors have already priced in a 93.5% chance of a 25-basis point rate cut on October 30.

At 1800 GMT, the British parliament will vote on the Withdrawal Agreement Bill that will shine light on when and how Britain will exit the European Union.

Daily December U.S. Dollar Index

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside with the formation of the potentially bullish closing price reversal bottom on October 21 at 96.885 and its subsequent confirmation earlier today.

The market is in no position to change the main trend to up. A trade through 96.885 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 94.975 to 99.305. Its retracement zone at 97.140 to 96.630 is currently being tested. Trader reaction to this zone will determine the near-term direction of the index.


Daily Technical Forecast

Based on the early price action and the current price at 97.105, the direction of the December U.S. Dollar index the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 97.140.

Bullish Scenario

A sustained move over 97.140 will indicate the presence of buyers. If his create enough upside momentum then look for the rally to extend into the downtrending Gann angle at 97.430. The uptrending Gann angle at 97.540 is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 97.140 will signal the presence of sellers. The first target is 96.885. If this fails then look for the selling to possibly extend into the main Fibonacci level at 96.630. Taking out this level could trigger an acceleration into an uptrending Gann angle at 96.255.

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