The U.S. Dollar is edging lower against a basket of major currencies on Monday in a mostly lackluster trade as investors continue to assess the impact of volatile rate projections against last week’s vow by three major central banks to wait-and-see despite surging inflation.

With the Fed still is insisting inflation is ‘transitory’, the next big test of faith in the Federal Reserve’s stand on patience looms on Wednesday, when U.S. inflation data is expected to show consumer growth running hot.

At 07:49 GMT, December U.S. Dollar Index futures are trading 94.250, down 0.067 or -0.07%.

There are no economic releases on Monday, but throughout the day no fewer than six Fed official are speaking, with the most attention likely to be on Vice Chair Richard Clarida who is talking on Fed and ECB policy.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside if Friday’s closing price reversal top is confirmed.

A trade through 94.645 will negate the closing price reversal top and signal a resumption of the uptrend.

A move through 94.180 will confirm the potentially bearish chart pattern, while a trade through 93.800 changes the main trend to down.

The minor range is 93.800 to 94.645. Its retracement zone at 94.225 to 94.125 is currently being tested.

The retracement zone controlling the near-term direction of the index is 93.810 to 93.610.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Monday is likely to be determined by trader reaction to 94.225.

Bullish Scenario

A sustained move over 94.225 will indicate the presence of buyers. The first upside target is a minor pivot at 94.415. Overcoming this level could trigger a surge into 94.645, followed by 94.740. The latter is a potential trigger point for an acceleration to the upside with 96.500 the next major upside target.

Bearish Scenario

A sustained move under 94.225 will signal the presence of sellers. Taking out 94.180 will confirm the closing price reversal top. This should lead to a quick test of 94.125.

The minor Fibonacci level at 94.125 is a potential trigger point for an acceleration to the downside with a support cluster at 93.810 to 93.800 the next major downside target area.