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James Hyerczyk
US Dollar Index

The U.S. Dollar hit another multi-year low against a basket of major currencies early Thursday before bouncing back to nearly unchanged on profit-taking and short-covering. The price action is essentially mirroring the movement in the heavily-weighted Euro.

The early price action suggests investors are jockeying for position ahead of today’s U.S. weekly unemployment claims report at 12:30 GMT. Initial claims are expected to come in at 1410K, slightly better than the previous week’s 1434K.

At 07:47 GMT, September U.S. Dollar Index futures are trading 92.735, down 0.115 or -0.12%. This is up from a low of 92.475.

In other news, Treasury yields fell ahead of the unemployment data and the Bank of England held rates steady while maintaining its current bond buying levels.

The dollar extended losses on Wednesday after the ADP National Employment Report showed U.S. private payrolls growth slowed sharply in July, suggesting the labor market recovery was faltering.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out last Friday’s closing price reversal bottom at 92.510. The main trend will change to up on a move through the nearest main top at 97.810.

The minor trend is also down. The main trend will change to up when buyers take out 93.980. This will also shift momentum to the upside.

The minor range is 93.980 to 92.475. Its 50% level at 93.230 is potential resistance and a possible trigger point for an acceleration to the upside.

The short-term range is 96.380 to 92.475. If the minor trend changes to up then look for the rally to possibly extend into its retracement zone at 94.430 to 94.890.

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Daily Swing Chart Technical Forecast

The index continues to straddle a pair of former main bottoms at 92.820 and 92.580, however, the direction of the September U.S. Dollar Index on Thursday is likely to be determined by trader reaction to yesterday’s close at 92.850.

Bearish Scenario

A sustained move under 92.850 will indicate the presence of sellers. This could lead to a retest of the intraday low at 92.475. This is a potential trigger point for an acceleration to the downside. The daily chart indicates there is plenty of room to the downside with the next major target a long-term 50% level at 91.450.

Bullish Scenario

A sustained move over 92.850 will signal the presence of buyers. The first upside target is the 50% level at 93.230. This is a potential trigger point for an acceleration into 93.980.

A close over 92.850 will produce a potentially bullish closing price reversal bottom. If confirmed, this could lead to a 2 to 3 day counter-trend rally.

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

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