U.S. Dollar Index (DX) Futures Technical Analysis – Approaching Major Support Zone at 91.650 – 91.150

The U.S. Dollar fell against a basket of major currencies for a fourth straight session on Friday to its lowest level since July 30. The catalyst fueling the sell-off was a disappointing headline number in the U.S. August Non-Farm Payrolls report, which likely means the Federal Reserve will back away from announcing the tapering of its massive stimulus measures.

On Friday, the September U.S. Dollar Index settled at 92.033, down 0.195 or 0.21%. This was up from an intraday low of 91.800.

Non-Farm Payrolls increased by 235,000 in August, well short of the 728,000 forecast by economists in a Reuters poll, while the unemployment rate dipped to 5.2% from 5.4% in the prior month. Wages increased a solid 0.6% and fewer people were experiencing long spells of unemployment.

Although the headline number missed, the unemployment rate and average hourly earnings boost, points to underlying strength in the economy even as growth appears to be slowing significantly in the third quarter because of the soaring infections, driven by the Delta variant of the coronavirus, and relentless shortages of raw materials, which are depressing automobile sales and restocking.

The U.S. markets are closed for the Labor Day holiday on Monday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 91.780 will reaffirm the downtrend. A trade through 93.195 will change the main trend to up.

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

The main range is 89.545 to 93.750. Its retracement zone at 91.650 to 91.150 is the primary downside target zone. Buyers could step in on a test of this area since this is a value zone.

The minor range is 93.195 to 91.800. Its retracement zone at 92.500 to 92.660 is the nearest upside target and resistance.

The short-term range is 93.750 to 91.800. Its retracement zone at 92.775 to 93.005 is another resistance zone.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to 92.035.

Bearish Scenario

A sustained move under 92.035 will indicate the presence of sellers. Taking out the main bottom at 91.780 will indicate the selling pressure is getting stronger. This could lead to a test of 91.650 to 91.150. Look for aggressive counter-trend buyers on a test of this zone.

Bullish Scenario

A sustained move over 92.035 will signal the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into the minor retracement zone at 92.500 to 92.660 over the short-run.