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U.S. Dollar Index Futures (DX) Technical Analysis – Strengthens Over 97.480, Weakens Under 97.380

James Hyerczyk

The U.S. Dollar is trading higher against a basket of currencies on Tuesday for a second session. The move is being primarily driven by a weaker Euro, but a drop in the Japanese Yen is also contributing to the strength of the index. Traders are saying growing optimism the United States and China are nearing the completion of Phase 1 of a partial trade agreement is underpinning the greenback.

At 05:45 GMT, December U.S. Dollar Index futures are trading 97.400, up 0.034 or +0.03%.

In recent days, Beijing and Washington have given encouraging signs of progress in trade talks. The U.S. government is considering dropping some tariffs on Chinese goods, the Financial Times reported on Monday.

Bloomberg also reported that China is reviewing locations in the United States where he could sign a so-called “Phase 1” trade deal with U.S. President Donald Trump.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 97.800 will change the main trend to up. A move through 96.960 will signal a resumption of the downtrend with 96.885 the next potential downside target.

The major support is a long-term retracement zone at 97.140 to 96.630. This zone stopped the selling at 96.885 on October 21 and 96.960 on November 1.

The short-term range is 97.800 to 96.960. Its retracement zone at 97.380 to 97.480 is the first upside target. Buyers are either going to blow through this zone and attempt to change the main trend to up, or sellers are going to form a secondary lower top with a potential shot 96.960 to 96.885.

The intermediate range is 99.305 to 96.885. If the main trend changes to up then look for the rally to extend into its retracement zone at 98.095 to 98.380.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 97.400, the direction of the December U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to the retracement zone at 97.380 to 97.480.

Bearish Scenario

A sustained move under 97.380 will indicate the presence of sellers. If this generates enough downside momentum then look for a test of the major 50% level at 97.140, followed by a pair of bottoms at 96.960 and 96.885.

Bullish Scenario

Overtaking 97.480 and sustaining the rally will signal the presence of buyers. This could trigger an acceleration to the upside with the next target the main top at 97.800. This is a potential trigger point for an acceleration into the 50% level at 98.095.

This article was originally posted on FX Empire