The U.S. Dollar edged lower against a basket of major currencies on Tuesday as many of the major banks and institutions headed to the sidelines ahead of Thursday’s U.S. bank holiday. The drop in volume was likely responsible for the feeble reaction to more optimistic news on U.S.-China trade.
Some of the selling pressure was likely fueled by profit-taking after the greenback’s strong surge last week. Some was likely position-squaring related to doubts that the two economic powerhouses will reach a trade deal in a timely manner.
At 21:26 GMT, December U.S. Dollar Index futures are trading 98.160, down 0.078 or -0.08%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through 98.300 will reaffirm the uptrend. Taking out the main bottom at 97.550 will change the main trend to down.
The main range is 99.305 to 96.885. Its retracement zone at 98.095 to 98.380 is currently being tested. It is also controlling the longer-term direction of the index.
The short-term range is 96.885 to 98.300. Its retracement zone at 97.595 to 97.425 is a potential downside target.
Daily Technical Forecast
The December U.S. Dollar Index has spent the entire week inside the 98.095 to 98.380 retracement zone. Trader reaction to this zone will determine the near-term direction. However, the extremely low volume is going to make it difficult to sell weakness and buy strength.
Gann angles are also playing a role in the movement of the market. The nearest resistance angle comes in at 98.320. On the downside is a downtrending Gann angle at 98.055.
The fact that the retracement zone stopped a rally at 98.300 on November 13, leading to a break into 97.55, should not be ignored.
Crossing to the weak side of the 50% level at 98.095 will indicate the presence of sellers. However, crossing to the weak side of the downtrending Gann angle at 98.055 could trigger an acceleration to the downside.
The trigger point for an upside breakout is the Fibonacci level at 98.380.
This article was originally posted on FX Empire
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