U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 90.060, Strengthens Over 90.160

The U.S. Dollar held above a 2018 low against a basket of major currencies on Friday ahead of fresh U.S. jobs data likely to give clues on the extent of fiscal stimulus needed to prop up the coronavirus-hit economy. Helping to underpin the greenback are firming Treasury yields. The benchmark 10-year bond yield reached its highest level since March, holding above 1% and making the dollar a more attractive investment.

At 11:19 GMT, March U.S. Dollar Index futures are trading 89.935, up 0.144 or +0.16%.

Later today at 13:30 GMT, the government will release the U.S. Non-Farm Payrolls report for December. According to a Reuters poll, the economy likely added 71,000 jobs in December, down from 245,000 in November. The Unemployment Rate is expected to have risen from 6.7% to 6.8%. Average Hourly Earnings like dipped to 0.2%.

Traders don’t expect the jobs report to have that much of an influence on the dollar index. The main focus over the near-term will be on the direction of Treasury yields.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but short-term momentum has shifted to the upside with the formation of the closing price reversal bottom on Wednesday and its subsequent confirmation in yesterday’s session.

A trade through 89.165 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through 92.730, which is highly unlikely.

The minor trend is up. It changed to up on Thursday when buyers took out 89.965. The move through this level was weak, indicating it may have been fueled by buy stops rather than actual buying.

Minor resistance is a pair of 50% levels at 90.060 to 90.160. This area stopped the rally earlier today at 90.120.

The minor range is 89.165 to 90.120. Its 50% level at 89.640 is potential support.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index is likely to be determined by trader reaction to the pair of 50% levels at 90.060 and 90.160.

Bearish Scenario

A sustained move under 90.060 will indicate the presence of sellers. The first downside target is 89.640. Aggressive counter-trend buyers could come in on a test of this level. They are going to try to form a secondary higher bottom. If it fails then look for the selling to possibly extend into 89.165.

Bullish Scenario

A sustained move over 90.160 will signal the presence of buyers. This is a potential trigger point for an acceleration to the upside. The daily chart shows there is plenty of room to run with 90.950 the next potential upside target.