U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 90.575 Pivot Sets Near-Term Tone

The U.S. Dollar is trading sharply lower against a basket of major currencies on Thursday, putting it in a position to end a two-day winning streak as hopes for a speedy economic recovery from the global coronavirus pandemic were dampened by disappointing U.S. labor market data.

An unexpected increase in weekly jobless claims dampened enthusiasm over otherwise upbeat data this week, the day after minutes from the U.S. Federal Reserve’s most recent monetary policy meeting showed the central bank was determined to continue supporting the economic recovery.

At 20:43 GMT, March U.S. Dollar Index futures are trading 90.585, down 0.364 or -0.40%.

Earlier today, the Labor Department’s report showed initial claims for state unemployment benefits were 861,000 last week, compared with 848,000 in the prior week. The number also came in well above expectations.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 90.095 will signal a resumption of the downtrend. The main trend will change to up on a trade through the nearest main top at 91.605.

The minor trend is up. This is controlling the upside momentum. A trade through 91.050 will indicate the buying is getting stronger, while a trade through 90.095 will change the minor trend to down.

The minor range is 90.095 to 91.050. The index is currently straddling its 50% level at 90.575.

The main range is 89.165 to 91.605. Its retracement zone at 90.385 to 90.095 is support. This zone stopped the selling at 90.095 on Tuesday.

On the upside, the resistance is a series of retracement levels at 90.950, 91.165 and 91.370.

Short-Term Outlook

The key level to pay attention to is the minor pivot at 90.575.

Trader reaction to 90.575 will determine whether 91.050 becomes a new secondary lower top or 90.095 becomes a new secondary higher bottom.

Bullish Scenario

A sustained move over 90.575 will indicate the presence of buyers. If this can create enough upside momentum then look for buyers to take another run at 90.950 to 91.050.

Bearish Scenario

A sustained move under 90.575 will signal the presence of sellers. This could trigger a retest of the retracement zone at 90.385 to 90.095.