U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 92.820, Strengthens Over 93.035

The U.S. Dollar is edging higher against a basket of major currencies on Thursday as doubts over the global economy’s strength subdued risk sentiment, while the Euro steadied ahead of a European Central Bank policy meeting later in the day that is expected result in a reduction in stimulus. The common currency makes up 57% of the dollar index so when it moves, the index tends to move in the opposite direction.

At 06:17 GMT, December U.S. Dollar Index futures are trading 92.740, up 0.096 or +0.10%.

The European Central Bank (ECB) is expected to reduce stimulus on Thursday, taking a token step towards unwinding the emergency economic aid it put in place during the pandemic. On paper, the news is bullish for the Euro and bearish for the U.S. Dollar, however, some of this news has already been priced into the market so the next move is not a slam dunk.

Later today at 12:30 GMT, traders will get the opportunity to react to the latest report on U.S. Weekly Unemployment Claims. Several Fed speakers are on tap at about 15:05 GMT and FOMC Member Williams speaks at 18:00 GMT. He could trigger a volatile reaction by the U.S. Dollar Index late in the session.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 93.710 will change the main trend to up. A move through 91.935 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum.

The short-term range is 93.710 to 91.935. The index is currently testing its retracement zone at 92.825 to 93.030. Trader reaction to this area will determine the next move by the index.

The main range is 89.550 to 93.710. Its retracement zone at 91.630 to 91.140 is the next downside target and potential value area.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 92.825.

Bullish Scenario

A sustained move over 92.825 will indicate the presence of aggressive counter-trend buyers. The next upside target is 93.030, followed closely by a minor top at 93.180. This is a potential trigger point for an acceleration to the upside with 93.710 the next potential upside target.

Bearish Scenario

A sustained move under 92.825 will signal the presence of sellers. These are trend traders, selling a 50% retracement of the last sell-off. The first downside target is a minor pivot at 92.395.

If 92.395 fails as support then look for the selling to possibly extend into the main bottom at 91.935.