US Dollar Index (DX) Futures Technical Analysis – August 4, 2017 Forecast

September U.S. Dollar Index futures are trading slightly lower shortly before the regular session opening and the release of the latest U.S. Non-Farm Payrolls report at 1230 GMT. Volume and volatility have been light during the pre-market trade.

The U.S. Non-Farm Employment Change is expected to show the economy added 182K jobs in July. The Unemployment Rate is expected to fall to 4.3% from 4.4%. Average Hourly Earnings are expected to rise 0.3%, up from 0.2%.

Average hourly earnings are a good indicator of inflation. If they come in lower than expected then this will be bearish for U.S. interest rates and the U.S. Dollar because it will reduce the chances of a Fed rate hike this year.

Traders should also pay close attention to the events in Washington. The dollar weakened on Thursday in reaction to a report that the Russia investigation is intensifying. According to a report from The Wall Street Journal released minutes before the close, Special Counsel Robert Mueller impaneled a grand jury in his investigation into Russia’s involvement in the U.S. election. Support for the U.S. Dollar could continue to erode if the situation continues to worsen for the President.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.390 will signal a resumption of the downtrend. It will also put the market on the weak side of the June 23, 2016 main bottom at 92.555. This could trigger an acceleration to the downside since the next major target is the May 3, 2016 main bottom at 91.45.

On the upside, the first target is a retracement zone at 93.25 to 93.46. A trade through 94.12 will change the main trend to up.

Forecast

Based on the current price at 92.68 and the earlier price action, the direction of the index today will be determined by trader reaction to 92.39.

Holding above 92.39 will signal the presence of buyers. This could trigger a short-covering rally into the resistance cluster at 93.24 to 93.25. This is followed by the Fibonacci level at 93.46.

Another resistance cluster comes in at 93.68 to 93.71. It is also a potential trigger point for an acceleration into 94.115 then 94.175.

The daily chart is wide open under 92.39. However, today’s session begins with the market in the window of time for a closing price reversal bottom. So if selling weakness under 92.39, make sure you have volume on your side because you could get trapped on the wrong side of the market if there is a reversal.