U.S. Dollar Index (DX) Futures Technical Analysis – 93.32 Sets the Tone Ahead of ADP Report; Ripe for Reversal

The U.S. Dollar is trading lower against a basket of currencies on Wednesday as investors square positions ahead of the end of the quarter and the ADP Non-Farm Employment Change report at 12:15 GMT. The report is expected to show the private sector added 552K new jobs in March. This would be a huge jump from the previously reported 117K in February.

At 09:54 GMT, June U.S. Dollar Index futures are trading 93.135, down 0.186 or -0.20%. This is down from a high of 93.470.

The ADP report could be a market moving event because it could show the economy is heating up, or holding steady. A bigger than expected number will increase speculation the Fed may have to change policy sooner than expected. This could be the source of heightened volatility.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today before the index turned lower. A trade through the intraday high at 93.450 will signal a resumption of the uptrend.

The main trend changes to down on a move through 91.290. This is highly unlikely but due to the prolonged move up in terms of price and time, the index is ripe for a potentially bearish closing price reversal top.

On the downside, the nearest support is a pair of Fibonacci levels at 92.510 and 92.200.

Daily swing Chart Technical Forecast

The direction of the June U.S. Dollar on Wednesday is likely to be determined by trader reaction to 93.320.

Bullish Scenario

A sustained move over 93.320 will indicate the presence of buyers. If this creates enough upside momentum then look for test of the intraday high at 93.470. Taking out this level could trigger an acceleration to the upside with 94.090 the next likely upside target.

Bearish Scenario

A sustained move under 93.320 will signal the presence of sellers. Taking out the previous top at 93.130 will indicate the selling is getting stronger. This could trigger an acceleration into 92.510.