U.S. Dollar Index (DX) Futures Technical Analysis – Traders Eyeing Jobless Claims Ahead of Friday’s NFP Data

The U.S. Dollar is trading flat on Thursday as traders await the release of the government’s weekly jobless claims report at 13:30 GMT.

Traders are also positioning themselves ahead of Friday’s nonfarm payrolls report, which they will scan for hints about the state of the U.S. economy and the impact of the Fed’s rate hikes.

At 08:00 GMT, March U.S. Dollar Index futures are trading 105.505, down 0.129 or -0.12%. On Wednesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $28.62, unchanged.

Labor Market Strength Fed’s Major Concern

Labor market strength was reinforced by the ADP National Employment report on Wednesday, which showed private employment increased by 242,000 jobs in February after rising 119,000 in January.

Meanwhile, January’s JOLTS job opening data declined slightly but continued to outweigh available workers. A tight labor market is often associated with high levels of inflation.

During testimony before congressional committees, Federal Reserve Chairman Jerome Powell mentioned the tight labor market this week. In doing so, he also indicated that central bank officials would consider speeding up the pace of rate hikes again.

Many investors took that as a sign that a 50 basis point rate hike is an option at the Fed’s next meeting, sending the March U.S. Dollar Index to its highest level since November 30.

Daily March U.S. Dollar Index Technical Analysis

The main trend is up according to the daily swing chart. The next target is the Nov. 30 main top at 106.773. A trade through 104.045 will change the main trend to down.

The long-term range is 97.00 to 114.445. The index is currently trading inside its retracement zone at 105.723 to 103.664.

The main range is 114.445 to 100.680. Its retracement zone at 107.563 to 109.187 is the next major target area.

Daily March U.S. Dollar Index Technical Forecast

Trader reaction to the long-term 50% level at 105.723 is likely to determine the direction of the March U.S. Dollar Index on Thursday.

Bullish Scenario

A sustained move over 105.723 will indicate the presence of buyers. If this creates enough upside momentum then look for a near-term surge into the 50% level at 107.563.

Bearish Scenario

A sustained move under 105.723 will signal the presence of sellers. The first downside target is a minor pivot at 104.888, followed by a long-term Fibonacci level at 103.664.