USD Index Futures Reject Downside Support

Posted Tuesday, December 4, 2018 by
Shain Vernier • 1 min read

No matter which side of FED policy you are on ― beit tightening or flexible ― it is tough to argue against the Greenback’s current state of limbo. Today’s whipsaw trading conditions for December USD Index futures sum up the impact of recent FED ambiguity. Rates are sure to rise later this month, but after that, the path forward becomes much less clear.

At the end of the day, uncertainty leads to volatility. That is what we have observed throughout the session, featuring an early sell-off and subsequent rebound for the Greenback. FED member comments hinting at 2019 tightening are being credited for the rally. The result has been a positive U.S. session for USD Index futures with rates above the 96.790 handle.

December USD Index Futures: Technical Outlook

The daily technicals for the December USD Index show a test of downside support and subsequent rally. The USD was in rough shape during the overnight. Now, losses have been largely erased and values are on the march north.

December USD Index Futures (DX), Daily Chart
December USD Index Futures (DX), Daily Chart

Overview: At press time, the CME’s FedWatch Index is showing an 83.5% chance of a coming rate hike on December 19. This is a strong reading, up 12.5% from the November 2 figure.

The rejection of the Daily SMA and Bollinger MP indicate that a test of yearly highs may be in the cards for the December USD Index. For now, pricing remains in bullish territory and the long-term uptrend is intact. A test of 2018’s high water mark of 97.350 may come to pass later in the week, possibly in conjunction with Thursday’s scheduled speech of Jerome Powell.

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