U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 90.700, Weakens Under 90.475

The U.S. Dollar is at its highest level since May 14 early Friday as traders await the release of the May U.S. Non-Farm Payrolls report at 12:30 GMT. On Thursday, the dollar index was boosted by stronger-than-expected U.S. jobs data that suggested an improving labor market and reinforced signs that the world’s largest economy was on its way to recovery from the COVID-19 pandemic.

At 07:55 GMT, June U.S. Dollar Index futures are trading 90.545, up 0.0044 or +0.05%.

Today’s jobs report could set the tone at the Federal Reserve meeting, scheduled for mid-June. The latest forecast shows traders expect the U.S. economy to have added 650,000 new jobs in May.

A stronger-than-expected headline number could stoke fears the Federal Reserve might consider when to start tapering its asset buying. This could drive U.S. Treasury yields higher and consequently the U.S. Dollar against a basket of major currencies.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out the last swing top at 90.430. A trade through the next main top at 90.910 will reaffirm the uptrend. The main trend will change to down on a move through 89.650.

The new minor range is 89.515 to 90.625. Its 50% level at 90.070 is potential support. This level will move higher as the index rises.

The short-term range is 91.435 to 89.515. The index is currently testing its retracement zone at 90.475 to 90.700.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Friday is likely to be determined by trader reaction to the short-term 50% level at 90.475.

Bullish Scenario

A sustained move over 90.475 will indicate the presence of buyers. This could trigger a move into the short-term Fibonacci level at 90.700. Taking out this level could trigger a surge into the main bottom at 90.910. This price is a potential trigger point for an acceleration to the upside with 91.435 to 91.495 the next likely target.

Bearish Scenario

A sustained move under 90.475 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential break into the minor pivot at 90.070. Since the main trend is up, buyers could come in on a test of this 50% level.