US Dollar Index (DX) Futures Technical Analysis – May 6, 2016 Forecast

June US Dollar Index futures are trading lower shortly before the release of the U.S. Non-Farm Payrolls report for April. The report is expected to show the economy added 203K jobs. The unemployment rate is expected to remain at 5.0% and Average Hourly Earnings are expected to come in unchanged at 0.3%.

Stronger than expected numbers should help underpin the U.S. Dollar. Average Hourly Earnings is the key number to watch since this is an inflation indicator. A stronger headline number and a weaker Average Hourly Earnings number will produce the most volatility.

Technically, the main trend is down according to the daily swing chart, however, momentum has been to the upside all week.

The main range is 95.18 to 91.88. Its retracement zone at 93.53 to 93.92 is the primary upside target and has been tested the last two days.

The short-term range is 91.88 to 93.86. Its retracement zone at 92.87 to 92.64 is the primary downside target. If the trend is getting ready to turn higher, then look for buyers to come in on a test of this zone.

Based on yesterday’s close at 93.78 and the early price action, the direction of the market today is likely to be determined by trader reaction to the 50% level at 93.53.

A sustained move over 93.53 will indicate the presence of buyers. This could create enough upside momentum to challenge the price cluster at 93.92 to 93.93.

Overtaking 93.93 could trigger an acceleration to the upside with the next target angles coming in at 94.56 and 94.87. The latter is the last potential resistance angle before the 95.18 main top.

A sustained move under 93.53 will signal the presence of sellers. The first target is a steep uptrending angle at 93.38. This price is the trigger point for a steep break with the next targets the short-term 50% level at 92.87 and a support cluster at 92.68, 92.64 and 92.63.

Watch the price action and read the order flow at 93.53 all session. This will tell us if the bulls or the bears are in control.