U.S. Dollar Index Futures (DX) Technical Analysis – Trader Reaction to 98.390 Sets the Tone on Friday

The U.S. Dollar is inching lower against a basket of currencies early Friday as investors awaited the release of the U.S. Non-Farm Payrolls report at 13:30 GMT.

On Thursday, the greenback surged following the release of a better-than-expected Preliminary Non-Farm Productivity report. Weekly Unemployment Claims were also impressive, falling to 202K, versus an estimate of 215K. The number of Americans filing for unemployment benefits dropped to a nine-month low last week, suggesting a tightening labor market would continue to keep the longest economic expansion in history on track despite weak business investment.

At 07:35 GMT, March U.S. Dollar Index futures are trading 98.375, down 0.006 or -0.01%.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 160,000 jobs in January after rising 145,000 in December. Employment gains could, however, exceed expectations given unseasonably mild weather, which could have boosted hiring at construction sites and in the leisure and hospitality industry.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The next potential upside target is the October 1, 2019 main top at 98.735. A trade through 97.165 will change the main trend to down.

The main range is 98.735 to 96.020. Its retracement zone at 97.700 to 97.380 is support. This zone is controlling the near-term direction of the market. Holding above this zone will continue to give the index an upside bias.

Daily Technical Forecast

Based on the early price action and the current price at 98.375, the direction of the March U.S. Dollar Index the rest of the session on Friday is likely to be determined by trader reaction to the downtrending Gann angle at 98.390.

Bullish Scenario

A sustained move over 98.390 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a potential acceleration to the upside with the next major target 98.735.

Bearish Scenario

A sustained move under 98.390 will signal the presence of sellers. The daily chart is wide open to the downside. If the inability to overcome 98.390 generates enough downside momentum then look for a potential break into the downtrending Gann angle at 98.040.

Crossing to the weak side of 98.040 will indicate the selling is getting stronger. This could trigger a further break into the nearest uptrending Gann angle at 97.750.