U.S. Dollar Index (DX) Futures Technical Analysis – Reaction to 94.100 Sets Early Tone Ahead of NFP Report

The U.S. Dollar finished lower against a basket of currencies on Thursday in a lackluster session as traders positioned themselves ahead of Friday’s U.S. Non-Farm Payrolls report. Traders are hoping the data helps the Federal Reserve set a definitive timeline for the start of winding down its economic support. Ahead of the report, the market is pricing in November for the start of Fed tapering.

At 20:33 GMT, December U.S. Dollar Index futures are trading 94.205, down 0.067 or -0.07%.

Friday’s non-farm payrolls data is expected to show continued improvement in the labor market, with a forecast for 455,000 jobs to have been added in September, a Reuters poll showed.

In economic news, the number of Americans filing new claims for jobless benefits dropped by the most in three months last week, suggesting the labor market recovery was regaining momentum after a recent slowdown.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 94.520 will signal a resumption of the uptrend. A move through 92.970 will change the main trend to down.

The minor trend is also up. A trade through 93.680 will change the minor trend to down. This will shift the momentum to the downside.

The minor range is 94.520 to 93.680. The index is trading on the strong side of its pivot at 94.100 making it new support.

The short-term range is 92.970 to 94.520. Its retracement zone is a key support area. It stopped the selling at 93.680 on October 4.

The main range is 91.935 to 94.520. Its retracement zone at 93.230 to 92.920 in the major support controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index early Friday is likely to be determined by trader reaction to the pivot at 94.100.

Bullish Scenario

A sustained move over 94.100 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the wall of resistance at 94.455, 94.520, 94.570 and the September 25, 2020 main top at 94.740.

Bearish Scenario

A sustained move under 94.100 will signal the presence of sellers. If this generates enough downside momentum then look for an acceleration into 93.745, this is followed by 93.680 and 93.562.