US Dollar Index (DX) Futures Technical Analysis – Reaction to 94.815 Fibonacci Level Will Set Today’s Tone

December U.S. Dollar Index futures are trading slightly higher early Friday, continuing the huge rally that took place on Thursday. Yesterday’s rally was fueled by a steep sell-off in the Euro. The single-currency broke sharply after the European Central Bank revealed a dovish monetary policy strategy that reduced the chances for a rate hike in 2018.

The rally could extend later in the session if the U.S. Advance GDP comes out better than the 2.6% forecast. Traders could also react to the Revised University of Michigan Consumer Sentiment report that is expected to come in at 100.8.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The rally was reaffirmed on Thursday when buyers took out a pair of main tops at 93.90 and 94.10.

The new main bottom is 93.365, followed by 92.59.

The main range is 97.30 to 90.795. Its retracement zone is 94.05 to 94.82. This zone is currently being tested. It is controlling the longer-term direction of the market.

Daily Forecast

Based on the current price at 94.72 (0536 GMT) and the earlier price action, the direction of the index the rest of the session is likely to be determined by trader reaction to the Fibonacci level at 94.82.

A sustained move over 94.82 will indicate the presence of buyers. If the buying volume is strong enough, this could trigger an acceleration to the upside with the next target the July 5, 2017 main top at 96.065.

A sustained move under 94.82 will signal the presence of sellers. If the selling volume begins to increase then look for a possible pullback into the major 50% level at 94.05.