U.S. Dollar Index (DX) Futures Technical Analysis – 92.535 – 92.765 Retracement Zone Controlling Direction

The U.S. Dollar finished lower against a basket of major currencies on Wednesday after a report on the private sector of the U.S. labor market came in well below expectations, while the heavy-weighted Euro climbed to a one-month high following higher-than-expected inflation data.

On Wednesday, September U.S. Dollar Index futures settled at 92.450, down 0.185 or -0.20%.

The greenback fell after the ADP National Employment Report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecast.

Other data showed U.S. manufacturing activity increased more than anticipated in August, but a measure of employment in factories fell to a nine-month low, likely due to a shortage of workers.

The Euro, which represents 57% of the dollar index, rose against the greenback to a one-month high as inflation worries persisted following data on Tuesday that showed Euro Zone inflation increased to 3% year-on-year in August, the highest in a decade and above the European Central Bank’s 2% target, as well as the 2.7% Reuters forecast.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.380 will signal a resumption of the downtrend.

A move through 93.195 will change the main trend to up. This is not likely but the index is down nine sessions from the main top on August 20, which puts it inside the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. A trade through 92.790 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 91.780 to 93.750. The index is currently trading on the weak side of its retracement zone at 92.535 to 92.765, making it resistance.

The minor range is 93.750 to 92.380. If the minor trend changes to up then its retracement zone at 93.065 to 93.230 will become the next target zone.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 92.585.

Bearish Scenario

A sustained move under 92.585 will indicate the presence of sellers. Trading on the weak side of the Fibonacci level at 92.535 will indicate the selling is getting stronger with 92.380 the next likely downside target.

Taking out 92.380 will signal a resumption of the downtrend. This could trigger an acceleration to the downside if the selling volume is strong enough with 91.780 the next likely target.

Bullish Scenario

Overtaking and sustaining a move over 92.585 will signal the presence of buyers. The first upside targets are 92.765 and 92.790.

Taking out 92.790 will change the minor trend to up. This could trigger a surge into the 50% level at 93.065 and a resistance cluster at 93.195 to 93.230.