U.S. Dollar Index (DX) Futures Technical Analysis – Resistance at 91.640 – 91.710 Potential Upside Target

The U.S. Dollar is extending its gains against a basket of major currencies, hitting its highest level since December 2 early in the session on Thursday, as pessimism about the U.S. economic outlook recedes before the release of important data on the jobs market on Friday.

Sentiment for the dollar has improved recently as progress in coronavirus vaccinations, moves by President Joe Biden to pass more fiscal stimulus, and improving economic data forced some bearish investors to give up their short positions.

At 07:12 GMT, March U.S. Dollar Index futures are trading 91.280, up 0.132 or +0.14%.

Data due on Friday is forecast to show the U.S. economy added 50,000 jobs in January, which would be a mild recovery from shedding 140,000 jobs in the previous month as a spike in coronavirus infections curbed economic activity.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was confirmed earlier in the session when buyers took out the previous day’s high.

A trade through 90.030 will change the main trend to down. This is highly unlikely, however, today’s session begins with the index up 10 sessions since its last bottom. This puts it inside the window of time for a potentially bearish closing price reversal top.

A closing price reversal top is not a change in trend, but a sign that the selling is greater than the buying at current price levels. It often forms to alleviate some of the upside pressure and to trigger a short-term correction into a value zone that could be attractive to new buyers.

At current price levels, support is a pair of 50% levels at 91.165 and 90.950.

On the upside, nearby resistance is a series of retracement levels at 91.370, 91.640 and 91.710.

Daily Swing Chart Technical Forecast

With the main trend up, the early price action suggests the direction of the index will be determined by trader reaction to 91.165.

Bullish Scenario

A sustained move over 91.165 will indicate the presence of buyers. This could trigger a quick rally into 91.370. Overtaking this level could trigger a surge into a potential resistance cluster at 91.640 to 91.710. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A failure to hold 91.165 will signal the presence of sellers. This could trigger a break into 90.950, which is a potential trigger point for an acceleration to the downside.

A close below 91.150 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.