U.S. Dollar Index (DX) Futures Technical Analysis – Plunge in Euro Fueling Breakout Over 95.900 Pivot

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The U.S. Dollar is trading higher against a basket of major currencies on Friday with the move being primarily fueled by a plunge in the Euro. The dollar is now set to post a fourth week of gains against the common currency as traders wager on interest rates rising faster and further in the United States.

At 11:58 GMT, December U.S. Dollar Index futures are trading 95.995, up 0.453 or +0.47%.

After a relatively flat opening, the dollar index surged after European Central Bank President Christine Lagarde pushed back against expectations of policy tightening in the Euro Zone, saying the ECB should not tighten policy as it could choke off recovery.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower following the confirmation of Wednesday’s closing price reversal top.

A trade through 96.270 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 93.865 will change the main trend to down.

The minor trend is also up. A trade through 95.525 will change the minor trend to down. This will confirm the shift in momentum.

The first minor range is 96.270 to 95.525. The market is trading on the strong side of its pivot at 95.900, making it support.

The second minor range is 94.965 to 96.270. Its 50% level support comes in at 95.620.

The third minor range is 93.865 to 96.270. Its pivot provides support at 95.070.

The major support controlling the direction of the index is 94.770 – 94.415.

On the upside, the target is the long-term 50% level at 96.500.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Friday is likely to be determined by trader reaction to 95.900.

Bullish Scenario

A sustained move over 95.900 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 96.270. Taking it out will mean the buying is getting stronger with a long-term 50% level at 96.500 the next major target. Sellers could come in on the first test of this level.

Bearish Scenario

A sustained move under 95.900 will signal the presence of sellers. This could lead to a retest of 95.620, followed closely by the minor bottom at 95.525.

The minor bottom at 95.525 is a potential trigger point for an acceleration to the downside with the next target a 50% level at 95.070.