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James Hyerczyk
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US Dollar Index

The U.S. Dollar fell to its lowest level since June 29 on Thursday, a day after the U.S. Federal Reserve said the job market still had “some ground to cover” before it would be time to ease monetary stimulus, knocking the wind out of a month-long rally by the greenback.

At 20:01 GMT, September U.S. Dollar Index futures are trading 91.875, down 0.442 or -0.48%.

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The index, which is still up 1.6% since the Fed’s June 16 meeting, after a hawkish shift from the U.S. central bank, found little support from U.S. economic data on Thursday.

Gross Domestic Product data showed that while the U.S. economy grew solidly in the second quarter, boosted by massive government aid, growth fell short of economists’ expectations.

GDP increased at a 6.5% annualized rate last quarter, the Commerce Department said on Thursday, well below the 8.5% rate economists polled by Reuters had forecast.

Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier on Thursday when sellers took out a pair of main bottoms at 92.075 and 91.995. A trade through the closing price reversal top at 93.195 will change the main trend to up.

The first support is a pair of long-term retracement levels at 91.945 to 91.850.

If the selling pressure continues then look for another steep break into another pair of retracement levels into 91.490 to 91.370.

On the upside, the nearest resistance is a long-term Fibonacci level at 92.495.

The main range is 89.545 to 93.195. The primary target of this current sell-off is its retracement zone at 91.370 to 90.940.

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Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index into the close on Thursday is likely to be determined by trader reaction to 91.950 and 91.850.

Bullish Scenario

A sustained move over 91.950 will indicate the presence of buyers. If this is able to generate enough upside momentum over the short-run, we could see a rebound rally into the Fibonacci level at 92.495.

Bearish Scenario

A sustained move under 91.850 will signal the presence of sellers. This could trigger another acceleration to the downside with the next major area a potential support cluster at 91.490, 91.505 and 91.370.

For a look at all of today’s economic events, check out our economic calendar.
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