US Dollar Index (DX) Futures Technical Analysis Forecast – Weakens Under 91.490, Strengthens Over 92.040

The U.S. Dollar is trading lower against a basket of currencies on Tuesday after failing to confirm yesterday’s potentially bullish closing price reversal bottom chart pattern. The index is being primarily pressured by a stronger Euro which rose to nearly a three-month high on expectations of more monetary stimulus from the United States and a strengthening recovery elsewhere that pushed up demand for riskier assets.

At 10:37 GMT, December U.S. Dollar Index futures are trading 91.710, down 0.148 or -0.16%.

Investors are short dollars as optimism about promising vaccine trials drives buying of riskier currencies and higher-yielding assets outside the United States, according to Reuters.

Worries about rising coronavirus cases have not provided the dollar with much support, as speculation grows that the Federal Reserve will act to support the economy through a tough winter before vaccinations become available.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 91.490 will signal a resumption of the downtrend. The main trend will change to up on a move through the nearest swing top at 93.190.

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

On Monday, the index formed a closing price reversal bottom. Taking out 92.040 will confirm the potentially bullish chart pattern. This won’t change the main trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally. The move will also shift momentum to the upside. A trade through 91.490 will negate the chart pattern and signal a resumption of the downtrend.

The minor range is 92.795 to 91.490. Its 50% level at 92.145 is the first resistance.

The short-term range is 93.190 to 91.490. Its retracement zone at 92.340 to 92.540 is the second resistance area.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index is likely to be determined by trader reaction to 91.490 and 92.040.

Bearish Scenario

A sustained move under 91.490 will indicate the presence of sellers. This could trigger an acceleration to the downside or a steady decline into the September 21, 2018 main bottom at 90.910.

Bullish Scenario

A sustained move over 92.040 will signal the presence of buyers. This could lead to a labored rally with potential resistance levels coming in at 92.145, 92.340 and 92.540.

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