U.S. Dollar Index

U.S. Dollar Index Futures (DX) Technical Analysis – Strengthens Over 97.665, Weakens Under 97.510

The U.S. Dollar is trading flat to lower against a basket of currencies early Monday. There are no major economic releases today with most professional traders starting to curtail speculative trading activity ahead of the Wednesday’s U.S. Federal Reserve interest rate and monetary policy decisions.

Later today, investors will get the opportunity to react to U.S. data on Goods Trade Balance and Preliminary Wholesale Inventories. Traders should also be on alert for an announcement about a possible partial trade deal between the United States and China.

At 07:45 GMT, December U.S. Dollar Index futures settled at 97.585, down 0.014 or -0.01%.

On Friday, the Office of the U.S. Trade Representative said the U.S. and China have made progress in trade discussions and have come close to finalizing parts of a phase one deal.

The agency issued a statement outlining the status of discussions following a conversation that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin had with Chinese Vice Premier Liu He.

“They made headway on specific issues and the two sides are close to finalizing some sections of the agreement,” USTR said. “Discussions will go on continuously at the deputy level, and the principals will have another call in the near future.”

U.S. Dollar Index
Daily December U.S. Dollar Index

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has swung to the upside with the formation of a closing price reversal bottom on October 21 at 96.885.

A move through last week’s high at 97.750 will indicate the buying is getting stronger. A trade through 96.885 will negate the reversal bottom and signal a resumption of the downtrend.

The minor trend is up. This is controlling the upside momentum. A trade through 97.055 will change the minor trend to down.

The main range is 94.975 to 99.305. Its retracement zone at 97.140 to 96.630 is support. This zone stopped the selling at 96.885 last week.

The short-term range is 99.305 to 96.885. Its retracement zone at 98.095 to 98.380 is the primary upside target.

U.S. Dollar Index
Daily December U.S. Dollar Index

Daily Technical Forecast

Based on the early trade and the current price at 97.585, the direction of the December U.S. Dollar Index on Monday is likely to be determined by trader reaction to the long-term uptrending Gann angle at 97.665 and the short-term uptrending Gann angle at 97.510.

Bullish Scenario

While holding above 97.510 will be important to the structure of the developing rally, taking out 97.585 is likely to fuel a breakout to the upside. The first target is 97.750.

Overtaking 97.585 will indicate the buying is getting stronger with potential targets a 50% level at 98.095 and a downtrending Gann angle at 98.120.

Bearish Scenario

The failure to overcome 97.665 will indicate the presence of sellers. Crossing to the weak side of the uptrending Gann angle at 97.510 will indicate the selling is getting stronger. This could lead to an eventual test of the uptrending Gann angle at 97.200.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.