U.S. Dollar Index Futures (DX) Technical Analysis – July 5, 2019 Forecast
The U.S. Dollar is surging to the upside against a basket of major currencies after the U.S. Non-Farm Payrolls report showed a bigger than expected jump in the headline number. The news was bullish for the greenback because it dampened the chances of a Fed rate cut at the end of July. This helped spike the Euro lower, which also fell on increasing chances of a European Central Bank rate cut on July 25.
According to the U.S. Labor Department, the U.S. economy added 224,000 jobs amid concerns that both the employment picture and overall growth picture were beginning to weaken. The unemployment rate edged up to 3.7% as the labor force participation rose. The closely watched Average Hourly Earnings disappointed, rising 0.2% on a monthly basis against expectations for 0.3% growth. Over the past 12 months, wages were up 3.1%, also a notch below market estimates of 3.2%.
Traders were looking for payrolls to rise 162,000 and the unemployment rate to hold steady at 3.6%. Furthermore, May’s dismal 75,000 jobs increase was revised lower to 72,000.
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 95.365 on June 25.
The main trend will change to up on a trade through 97.265. A move through 95.365 will signal a resumption of the downtrend.
The minor trend is up. This confirms the shift in momentum. A trade through 96.120 will change the minor trend to down.
The index is also trading on the strong side of a short-term retracement zone at 96.540 to 96.315. This zone is new support. The main retracement zone at 96.205 to 95.850 is also support. Trading above these zones is helping to generate an upside bias.
Based on the early price action, the direction of the September U.S. Dollar Index the rest of the session is likely to be determined by a pair of Gann angles at 96.745 and 96.860.
Overcoming and sustaining a rally over 96.745 will indicate the presence of buyers. This could trigger an acceleration to the upside with the next target angle coming in at 97.060. This is the last potential resistance angle before the 97.265 main top.
A sustained move under 96.745 will signal the presence of sellers. This could trigger a sharp break into the short-term Fibonacci level at 96.540, followed by uptrending Gann angle support at 96.365.
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