US Dollar Index (DX) Futures Technical Analysis – November 6, 2015 Forecast

December U.S. Dollar Index futures are trading slightly higher ahead of the release of the U.S. Non-Farm Payrolls report for October at 8:30 a.m. ET. A consensus of investors estimate the economy added 179,000 jobs. The unemployment rate is expected to hold steady at 5.1%.

Average hourly earnings are going to be the most watched part of the report because of its implications for future inflationary trends. It is forecast to rise 0.2%, leaving the annual rate unchanged at 2.2%.

The price action by the U.S. Dollar since October 15 indicates that the Greenback has regained its supremacy. The index also surged on October 28 when the Fed issued a hawkish monetary policy statement, signaling to investors that a December rate hike was still a strong possibility. Going into today’s jobs report, traders have priced in a 60% probability that a rate hike will occur before the end of the year.

Based on Thursday’s close at 98.05, there are two major numbers to watch today.

The key number to watch on the upside is a long-term downtrending angle at 98.24. This is the last potential resistance angle before the August 7 main top at 98.74.

Taking out 98.74 will reaffirm the uptrend. It will probably create enough upside momentum to continue through the major Fibonacci level at 98.78. The next major target above this level is March 20 main top at 102.45. I don’t think this level will be reached today.

A sustained move under the steep uptrending angle at 97.83 will signal the presence of sellers. The daily chart is wide open under this angle with the next target a long-term downtrending angle at 96.74. This angle is also a potential trigger point for another acceleration to the downside with an uptrending angle at 95.83 the next major target.

Watch the price action and read the order flow at 98.24 and 97.83 today. Trader reaction to these levels will tell us whether the bulls or the bears are in control today. Look for a bullish tone to develop on a sustained move over 98.24 and a bearish tone on a sustained move under 97.83.

Also note that the index has posted a prolonged move up in terms of price and time, this puts it in the window of time for a potentially bearish closing price reversal top. This will occur if a bullish report sends the index higher, but investors decide to book profits before the end of the day.

A number above 179,000 will be bullish for the U.S. Dollar. A number below 179,000 may not necessarily be bearish, but it could put a limit on any upside price action.