Dollar Index arrives at major level ahead of NFP

May 6, 2016

As trading unwinds after an unexciting day, the focus is slowly turning to Friday’s US monthly non-farm payrolls report. My colleague James Chen’s NFP preview can be found in THIS article, which contains all the information you need. The long and short of it is that a headline reading of 200,000 jobs created is expected to be seen, with an unchanged rate of unemployment of 5.0% and another 0.3% increase in monthly average hourly earnings. If correct, this would actually be a rather bullish employment report and would most likely increase the odds of a 2016 rate rise, leading to further gains for the dollar. But if the recent trend of weaker US data continues, then expect to see the buck come under renewed selling pressure.

Ahead of Friday’s monthly jobs report, the Dollar Index has reached a key technical area around 93.80-94.00. As can be seen from the daily chart, below, this area was previously support and corresponds with the 61.8% Fibonacci retracement level of the most recent downswing. A short-term downward-sloping trend line meets the 21-day exponential moving average slightly above this area.

Due to the conflux of so many technical indicators in close proximity, there is a danger that the Dollar Index could resume its downward trend from around this 93.80-94.00 area. If so, a revisit of the prior support at 92.65 or the support trend of the bearish channel around 91.90/92.00 would then become highly likely.  

But the fact that the Dollar Index failed to break decisively below the prior low of 92.65 decisively may indicate a change in the trend as there was clearly not sufficient supply for the buck to plummet towards 90. 

However, while below the above-mentioned resistance 93.80-94.00 range, I would still give the sellers the benefit of the doubt in that this could just have been a normal short-term pullback in a downward-trending market.

This bearish outlook could change should the Dollar Index break above this area decisively, though for the long-term trend to also turn bullish the bulls would require a break above the resistance trend of the bearish channel, at around 95.00/96.00 area.

In any event, Friday’s US jobs report could certainly provide the stimulus for a push in one or the other direction.  Ahead of the data, I wouldn’t be surprised to see the dollar weaken after a three-day rally.  

Publication source
FOREX.com information  FOREX.com reviews

January 20, 2017
The dollar has settled moderately lower
Asian stock markets were mixed overnight, after U.S. and European shares closed in the red Thursday. Japan and mainland China bourses managed to move higher (Chinese GDP beat expectations at 6.8%)...
January 20, 2017
A huge disappointment in the UK data
UK retail sales fell most since 2012. We see he fastest pace of decline in almost five years in December. It is due to sales of... pretty much everything from household goods to clothing and food...
January 20, 2017
Trump takes office today. Markets await inauguration speech
Investors await Trump's inauguration and speech due later today as he takes office as the 45th President of the United States. The U.S. dollar was seen giving up some of the gains yesterday with some volatility coming off the EURUSD on the back of the ECB meeting...

 FXTM Rating
FXCM Rating
FxPro Rating
Fort Financial Services Rating
XM Rating
EXNESS Rating

EZTrader Rating
Binary.com Rating
TropicalTrade Rating
Empire Option Rating
OptionBit Rating
First Binary Option Service Rating