U.S. Dollar Index (DX) Futures Technical Analysis – Look for Downside Bias on Sustained Move Under 90.395

The U.S. Dollar is trading lower against a basket of major currencies on Monday, threatening to erase all of last week’s gains after President Trump finally signed the coronavirus relief and government spending bill that was passed by the U.S. Congress last Sunday. The early selling may have been exaggerated, however, by the light trading volume with many of the major players on the sidelines until after January 1.

At 09:06 GMT, March U.S. Dollar Index futures are trading 89.970, down 0.280 or -0.31%.

Trump signed into law the $2.3 trillion pandemic aid and spending package, officials said on Sunday night, averting a partial federal government shutdown.

In other related news, the British Pound was treading water just below a 2-1/2 high in the Asian session following the agreement last week of a narrow Brexit trade deal that does not cover Britain’s financial sector.

The Euro is trading higher after a flat opening but remains below a 2-1/2 high reached on Christmas Day at 1.2298. Traders said the price spike was likely an aberration fueled by extremely thin trading conditions in Asia.

Demand for risk is also helping to boost the Japanese Yen against the U.S. Dollar. Meanwhile, policymakers at the Bank of Japan were divided on how far they should go in examining yield curve control with some calling for a comprehensive review of the framework, a summary of opinions voiced at the December rate review showed Monday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 89.640 will signal a resumption of the downtrend after six days of sideways to higher price action. The main trend will change to up on a move through 92.730.

The minor trend is also down. A trade through 91.150 will change the minor trend to up.

The minor range is 91.150 to 89.640. Its 50% level at 90.395 is resistance.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index the rest of the session on Monday is likely to be determined by trader reaction to 90.395.

Bearish Scenario

A sustained move under 90.395 will indicate the presence of sellers. If this move creates enough downside momentum then look for the move to possibly extend into the minor bottom at 89.640. It will be hard to reach this level on Monday if the volume remains below average.

Bullish Scenario

A sustained move over 90.395 will signal the presence of buyers. If this generates enough upside momentum then look for a possible surge into 90.95, 91.150 and 91.185.

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