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James Hyerczyk
US Dollar Index

The U.S. Dollar fell against a basket of major currencies on Monday as Treasury yields held below recent highs despite a blowout U.S. Non-Farm Payrolls report on Friday and today’s much better than expected Non-Manufacturing PMI report. However, some investors said the selling pressure was exaggerated and may have been fueled by low liquidity with Europe, the U.K., Hong Kong, China, Australia and New Zealand on an extended Easter holiday.

At 20:30 GMT, June U.S. Dollar Index futures are trading 92.585, down 0.466 or -0.50%.

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In economic news, data showed that a measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders. This follows Friday’s U.S. Non-Farm Payrolls report that showed the economy created the most jobs in seven months in March as more Americans got vaccinated and the government doled out additional pandemic relief money, marking the start of what could be the strongest economic performance this year in nearly four decades.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on March 31.

A trade through 93.470 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 91.290.

The minor trend is down. It changed to down on Monday when sellers took out 82.840. This confirmed the shift in momentum.

The first downside target is a Fibonacci level at 92.510. This is followed by a short-term 50% level at 92.380 and another Fibonacci level at 92.200. Since the main trend is up, buyers could come in on a test of these levels.

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Short-Term Outlook

Rising stocks and a falling U.S. Dollar may be a sign that market conditions are changing. For months, the two assets were moving higher in tandem. Investors are now watching to see if that relationship continues as it may indicate a shift in how the currency responds to improving risk appetite.

The daily chart indicates that the direction of the June U.S. Dollar early Tuesday will be determined by trader reaction to the Fibonacci level at 92.510.

Bearish Scenario

A sustained move under 92.510 will indicate the presence of sellers. This could trigger a further break into to short-term 50% level at 92.380, followed closely by 92.200. The latter is a potential trigger point for an acceleration into a pair of 50% levels at 91.870 and 91.620.

Bullish Scenario

A sustained move over 92.510 will signal the presence of buyers. If this move creates enough upside momentum then look for buyers to attempt a breakout over the minor top at 93.130.

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