The U.S. Dollar is edging higher against a basket of major currencies on Monday, as surging coronavirus cases in Europe and the United States threaten to derail the economic recovery in these regions, making the greenback an attractive safe-haven asset.
The lack of progress toward a U.S. stimulus package has also put traders in a cautious mood leading them to seek shelter in the dollar.
At 06:15 GMT, December U.S. Dollar Index futures are trading 92.960, up 0.195 or +0.21%.
According to Reuters, the United States has recorded its highest ever number of new COVID-19 cases for two consecutive days, while Italy has ordered restaurants and bars to shut by 6 p.m. as a fresh wave of infections sweeps Europe.
Additionally, U.S. House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday regarding the latest stimulus spending plan – but there have been few tangible signs that a long-stalled deal is actually nearer.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 93.925 will change the main trend to up. The downtrend will resume if sellers take out 92.460.
The minor range is 91.750 to 94.795. Its 50% level or pivot at 93.275 is potential resistance. It’s also a potential trigger point for an acceleration to the upside.
The short-term range is 97.785 to 91.750. Its retracement zone at 94.785 to 95.500 is controlling the near-term direction of the index.
Daily Swing Chart Technical Forecast
The dollar index stopped going down on October 21 when it hit 92.460. It has been consolidating for three sessions which could mean that the sellers are lightening up on the downside pressure or new counter-trend buyers are re-entering the market.
Both are likely reacting to the stalemate over the stimulus package, but other reasons for the price action could be positioning ahead of the November 3 election and new worries about a resurgence of the pandemic.
Given the news and the daily chart pattern, the key level to watch is 93.275. Overtaking this level could trigger an acceleration to the upside, while holding as resistance will likely indicate further consolidation.
I believe the stimulus news is still the catalyst controlling the direction of the index. It could continue to consolidate until the deal is confirmed, or negotiations are postponed until after the election.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire