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James Hyerczyk
December U. S. Dollar Index

The U.S. Dollar is trading slightly lower against a basket of currencies on Wednesday as investors await the release of the U.S. Federal Reserve’s interest rate decision, monetary policy statement and economic projections.

The dollar is trading slightly better against the Euro, but lower against the British Pound. Thursday will be a busy day for these currencies with the European Central Bank set to hold its policy meeting, and the UK holding a general election over Brexit.

The greenback is trading mixed against the safe-haven currencies, losing ground to the Japanese Yen, but moving higher against the Swiss Franc.

At 17:58 GMT, December U.S. Dollar Index futures are trading 97.380, down 0.005 or -0.01%.

Daily December U.S. Dollar Index

Fed Decisions on Tap

According to CNBC, “The Fed is expected to conclude its December meeting at 19:00 GMT on Wednesday by signaling it remains on hold for the time being and is monitoring economic developments.”

“Federal Reserve Chairman Jerome Powell is also expected to vow to do whatever it takes to keep the short-term lending market stable as year-end approaches and banks move to spruce up their balance sheets and make them look safer for regulatory purposes.”

“The Fed could give a nod to an improved economy and lower unemployment, following Friday’s blowout November jobs report. “

“The FOMC is confident that current policy settings are at an appropriate level to lift US inflation back towards target,” Joseph Capurso, senior currency strategist at Commonwealth Bank of Australia, wrote in a note. “We doubt there has been any material reassessment of this view since the October meeting.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 97.200 will signal the resumption of the downtrend. The main trend will change to up on a move through 98.495.

The minor trend is also down. On December 6, the index posted a potentially bullish closing price reversal bottom. After three sessions, the chart pattern has yet to be confirmed. A move through 97.815 will confirm this chart pattern and shift momentum to the upside.

On the downside, the nearest major support is the long-term 50% level at 97.140. The major Fibonacci support level comes in at 96.630.

The short-term range is 98.495 to 97.200. Its retracement zone at 97.850 to 98.000 is the primary upside target. Since the main trend is down, sellers could come in on the first test of this area.

Daily Technical Forecast

Based on the early price action and the current price at 97.380, the direction of the December U.S. Dollar Index the rest of the session on Wednesday is likely to be determined by trader reaction to a downtrending Gann angle at 96.495 and an uptrending Gann angle at 97.450.

Bearish Scenario

A sustained move under 97.450 will indicate the presence of sellers. If this move creates enough downside momentum then look for a possible break into the minor bottom at 97.200, followed by an uptrending Gann angle at 97.170 and a 50% level at 97.140.

If 97.140 fails then look for the break to possibly extend into a pair of main bottoms at 96.960 and 96.885.

Bullish Scenario

A sustained move over 97.495 will signal the presence of buyers. This is a potential trigger point for an acceleration to the upside with the next target the short-term 50% level at 97.850.

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