U.S. Dollar Index (DX) Futures Technical Analysis – Breakout Over 91.710 Could Trigger Rally into 92.310
The U.S. Dollar is extending its gains from yesterday’s session against a basket of major currencies early Friday with the Euro and Japanese Yen hitting multi-month lows. The index is being underpinned by comments from Federal Reserve Chair Jerome Powell on Thursday.
Powell sparked a rise in Treasury yields which helped boost demand for the dollar by his failure to express concern about a recent sell-off in bonds while sticking to his stance to keep interest rates low for a long time.
At 08:36 GMT, March U.S. Dollar Index futures are trading 91.845, up 0.201 or +0.22%.
While Powell did stick with dovish rhetoric overall, he said the sell-off in Treasuries was not “disorderly” or likely to push long-term rates so high the Fed might have to intervene more forcefully, reigniting a sell-off in Treasuries.
He also reiterated a commitment to maintain ultra-easy monetary policy until the economy is “very far along the road to recovery.”
Later today at 13:30 GMT, the U.S. will release its February Non-Farm Payrolls report. It could be the source of volatility, but it’s better to watch the action in the Treasury market then to try to guess what the numbers mean.
Economists expect to see that 210,000 payrolls were added in February, compared to just 49,000 in January, according to Dow Jones. The Unemployment Rate is expected to stay flat at 6.3%. Average Hourly Earnings are expected to have risen 0.2%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out the last main top at 91.605. The main trend will change to down on a trade through 89.675. This is highly unlikely, but a close under 91.640 will produce a potentially bearish closing price reversal top.
The minor trend is also up. A trade through 90.635 will change the minor trend to down and shift momentum to the downside.
The main range is 94.250 to 89.165. The index is currently testing its retracement zone at 91.710 to 92.310. This zone is controlling the longer-term direction of the dollar index.
The minor range is 90.635 to 91.940. Its 50% level at 21.285 is support. This level will move up as the index moves higher.
Daily Swing Chart Technical Forecast
The direction of the March U.S. Dollar Index on Friday is likely to be determined by trader reaction to the 50% level at 91.710.
Bullish Scenario
A sustained move over 91.710 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into the main Fibonacci level at 92.310. Sellers could come in on the first test of this level, but overtaking it could trigger an acceleration into the November 23 main top at 92.730.
Bearish Scenario
A sustained move under 91.705 will signal the presence of sellers. This could trigger an acceleration into the pivot at 91.285.
A close under 91.645 will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
