U.S. Dollar Index (DX) Futures Technical Analysis – Sustained Move Under 92.535 Targets 91.780 Main Bottom

The U.S. Dollar finished lower against a basket of major currencies on Thursday as traders continued to bet that a soft U.S. Non-Farm Payrolls report will cause the Federal Reserve to pause any thoughts of an early tapering at its September 21-22 policy meeting.

On Thursday, September U.S. Dollar Index futures settled at 92.230, down 0.220 or -0.24%.

The dollar weakened despite strong labor market data, while the heavily-weighted Euro remained near a one-month high versus the greenback after European Central Bank policymakers made comments that kept inflation concerns in focus.

The dollar has been under pressure on uncertainty over Fed policy. Last Friday, Fed chair Jerome Powell said that tapering of its stimulus could begin this year, yet the central bank was in no hurry.

Friday brings the major August jobs report, which investors are watching closely to decipher how fast the Federal Reserve will remove easy monetary policy. Economists predict 720,000 jobs were added in the month, down from 943,000 jobs added in July.

Any number from 720,000 on up should be bullish for U.S. Treasury yields and the U.S. Dollar. Anything below 650,000 should put further pressure on the U.S. Dollar by delaying tapering until November or December.

However, keep in mind that Monday is a U.S. bank holiday so we may not see the true reaction in the markets until traders return sometime next week.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.200 will signal a resumption of the downtrend.

A move through 93.195 will change the main trend to up. This is highly unlikely, but the market is ripe for a potentially bullish closing price reversal bottom.

The main range is 91.780 to 93.750. The index is currently trading on the weak side of its retracement zone at 92.535 to 92.765, making it resistance.

The short-term range is 93.750 to 92.200. Its retracement zone at 92.975 to 93.160 is additional resistance. This zone will move down as the market moves lower.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index on Friday is likely to be determined by trader reaction to 92.200.

Bearish Scenario

A sustained move under 92.200 will indicate the presence of sellers. If this move creates enough downside momentum over the near-term then look for the selling to eventually extend into the July 30 main bottom at 91.780.

Bullish Scenario

A sustained move over 92.200 will signal the presence of buyers. The first potential upside target is the Fibonacci level at 92.535. Since the main trend is down, look for sellers on the first test of this level.

Overtaking 92.535 will indicate the buying is getting stronger with the resistance cluster at 92.765 – 92.790 the next likely upside target area.