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James Hyerczyk

The U.S. Dollar is inching lower against a basket of major currencies early Monday, putting it in a position to challenge a two-year low while posting its largest monthly decline since July. A combination of vaccine optimism and bets on more monetary easing from the Federal Reserve later in the month is helping to dampen the greenback’s appeal as a reserve currency.

At 02:54 GMT, December U.S. Dollar Index futures are trading 91.680, down 0.121 or -0.13%.

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The dollar index continues to feel pressure as promising trial results for three major vaccine candidates excited investors about an eventual end to the coronavirus pandemic, increasing demand for higher-yielding currencies.

Additionally, with the drawn-out U.S. election distracting lawmakers from passing any sort of fiscal spending package, investors are now expecting the Federal Reserve to step in and provide monetary support in the form of more bond buying.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The chart indicates there is plenty of room to the downside with 90.810 the next major target. A trade through 93.190 will change the main trend to up.

The minor trend is also down. A trade through 92.795 will change the minor trend to up. This will also shift momentum to the upside.

Today’s session also starts with the December U.S. Dollar Index inside the window of time for a potentially bullish closing price reversal bottom. This won’t change the main trend to up, but it could trigger a 2 to 3 day counter-trend rally.

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Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Monday is likely to be determined by trader reaction to 91.800.

Bearish Scenario

A sustained move under 91.800 will indicate the presence of sellers. If this move creates enough downside momentum, then look for an eventual test of the September 21, 2018 main bottom at 90.810.

Bullish Scenario

A sustained move over 91.800 will signal the presence of buyers. A close over this level will form a closing price reversal bottom. If confirmed, this could trigger a 2 to 3 day counter-trend rally equal to at least 50% to 61.8% of the current break from 93.190.

For a look at all of today’s economic events, check out our economic calendar.

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