March U.S. Dollar Index futures are trading lower early Monday, but mounting a rebound rally that has put it at its high for the session, shortly before the cash market opening. The dollar is decisively lower against the Japanese Yen, but recovering from earlier weakness against the Australian and New Zealand Dollars and the Euro.
Flash Services PMI is the only report out of the U.S. today. Many investors are preparing for the release of the Reserve Bank of Australia Monetary Policy Meeting Minutes and the Bank of Japan Policy Rate and Monetary Policy Statement.
Volume could be light today and for the week because of the start of the Christmas and New Year holidays.
The main trend is up according to the daily swing chart. However, momentum appears to be shifting to the downside after a spike to the upside on December 15.
A trade through 103.535 will signal a resumption of the uptrend. A move through 100.635 will turn the main trend to down.
The short-term range is 100.635 to 103.535. Its 50% level at 102.085 is the first downside target.
The main range is 99.250 to 103.535. Its pivot price at 101.393 is the second downside target.
Based on the current price at 102.835, the direction of the dollar index today is likely to be determined by trader reaction to the steep uptrending angle at 102.750.
A sustained move over 102.750 will signal the presence of buyers. If the volume picks up then this could generate enough upside momentum to challenge the high at 103.535.
A sustained move under 102.750 will indicate the presence of sellers. The next target angle comes in at 102.135. This is followed by the short-term 50% level at 102.085. Since the trend is up, we could see a technical bounce on the first test of this level.