US Dollar Index (DX) Futures Technical Analysis – August 7, 2015 Forecast

September U.S. Dollar Index futures are trading a little lower before the regular session opening and ahead of the release of the U.S. Non-Farm Payrolls report for July. The report is expected to show the economy added 222K new jobs last month.

A number substantially higher than 222K will likely mean the Fed will raise rates in September. This will likely trigger a strong rally today. A number substantially below 222k will likely mean the Fed will wait until December before raising rates. This could trigger a sharp break.

The market is currently at 97.88 which puts it inside a pair of uptrending angles at 97.80 and 98.06 and also inside a major retracement zone at 97.46 to 98.44.

Today’s price action will be two-fold. Firstly, traders will react to the angles then to the retracement levels.

A trade over the angle at 98.06 will signal the presence of buyers. This will likely trigger a rally into the Fibonacci level at 98.44. This price is also a trigger point for a sharp breakout with the next target coming in at 100.56. This price may not be reached today, but it is definitely a short-term target.

A failure at 97.80 will signal the presence of sellers. The first downside target under the angle is the 50% level at 97.46. This price is also a potential trigger point for a steep sell-off into an uptrending angle at 96.81.

Taking out 96.81 with conviction could trigger another sharp sell-off into the main bottom at 93.36. A trade through this price will turn the main trend to down on the daily chart with a support cluster at 95.55 the next likely target. If this price fails then look for another acceleration into an angle at 94.43.

Look for increased volatility with the release of the jobs report at 8:30 a.m. ET. Look for a bullish tone on a sustained move over 98.06 and a bearish tone on a sustained move under 97.80.