U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 94.100 Pivot Sets the Tone

The U.S. Dollar closed lower on Friday but off its low following the release of a mixed U.S. Non-Farm Payrolls report. Although the headline number came in below expectations, the rest of the report including the Unemployment Rate, Average Hourly Earnings and last month’s positive headline revision, were strong enough to keep the Federal Reserve on track for the start of tapering its asset purchases as early in November.

On Friday, December U.S. Dollar Index futures settled at 94.079, down 0.142 or -0.15%.

The fact that the gain was modest could temper expectations for a swift acceleration in economic growth following an apparent sharp slowdown in the third quarter, but is unlikely to stop the Fed from starting the process of reducing its monthly bond purchases as soon as November.

September’s employment report is the last one available before the Federal Reserve’s November 2-3 policy meeting.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on September 30.

A trade through 94.520 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 92.970.

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

The minor range is 94.520 to 93.680. The index straddled its pivot at 94.100 on Friday before closing below it.

The short-term range is 92.970 to 94.520. Its retracement zone at 93.745 to 93.560 is the next downside target. This area 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 is controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Monday 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 generates enough upside momentum then look for the rally to possibly extend into a cluster of potential resistance levels at 95.455, 94.520 and 94.570.

Bearish Scenario

A sustained move under 94.100 will signal the presence of sellers. This could create the downside momentum needed to challenge the short-term 50% level at 93.745, the minor bottom at 93.680 and the short-term Fibonacci level at 93.562.