U.S. Dollar Index (DX) Futures Technical Analysis – Optimism Over Stimulus Deal Could Extend Break into 91.750
The U.S. Dollar hit a seven-week low against a basket of major currencies on Wednesday after U.S. President Donald Trump and House Speaker Nancy Pelosi boosted hopes for a large fiscal stimulus package, prompting some traders to ramp up bets on riskier currencies.
The greenback slipped to a four-week low against the yen, with the Japanese currency logging its best one-day performance since August 28.
The British Pound vaulted to a six-week high against the U.S. Dollar after Britain’s chief Brexit negotiator David Frost said negotiations with the European Union will resume on Thursday afternoon.
On Wednesday, December U.S. Dollar Index futures settled at 92.600, down 0.452 or -0.49%.
Trump fueled most of the selling after he said Tuesday he was willing to accept a large aid bill despite opposition within his own Republican Party.
Pelosi, the nation’s top Democratic leader, later said she was optimistic about chances for a fresh aid deal despite resistance from Senate Republicans, though she acknowledged it might not pass until after the election.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The trend changed to down when sellers took out 93.000. The downtrend was reaffirmed when the selling was strong enough to take out the September 21 main bottom at 92.755.
The short-term range is 91.750 to 94.795. Trading below its 50% level at 93.275 is contributing to the downside momentum. This price is new resistance.
We’re in a news driven market so the downside momentum will continue as long as traders are open to the possibility of a new stimulus deal before the November 3 election.
If hopes for a deal continue to rise then look for a possible acceleration into the September 1 main bottom at 91.750.
If hope fades for a deal before November 3 then we could see some short-covering and profit-taking. This could trigger a retracement back to the pivot at 93.275.
If the negotiations fall apart then look for an acceleration to the upside over 93.275 and a possible change in trend on a breakout over 93.925.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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