Technical Bias: Bullish
Key Takeaways
- US dollar climbed higher yesterday post solid labor data.
- The headline nonfarm payrolls number came in much better at 288K and the unemployment rate dropped to 6.1%.
- US dollar index support seen at 80.00 and resistance ahead at 80.30.
The US dollar registered an impressive rise against most of its counterparts, including the Euro, Swiss franc and the Japanese yen. However, the US dollar index stalled right around an important resistance area, which might cause a pullback in the near term.
Technical Analysis
There is an important bearish trend line on the daily timeframe for the US dollar index. The US dollar index jumped higher during yesterday’s NY session after the release of the jobs data. It managed to break the 80.00 resistance level and breached the trend line as well. However, it found resistance in the form of a crucial confluence zone of 200 and 50-day simple moving averages. The 200-day SMA is also sitting just below the 50% Fibonacci retracement level of the last drop from the 81.09 high to 79.59 low. The daily RSI also reached the 50 level at the same time. This was one of the main reasons for which the rally in the US dollar stalled. The US dollar index just managed to close above the trend line, but it cannot be considered as a convincing break. So, if it climbs again, then it would be interesting to see how it reacts around the mentioned confluence resistance zone. A break above the resistance might take it towards the 61.8% fib level.
On the other hand, if the US dollar index moves lower again, then it might find support around the broken trend line area. Any further losses might take it towards the 100-day SMA, which could hold the downside moving ahead.
The daily RSI needs to break the 50 level if the US dollar has to gain traction in the coming sessions else a move lower is quite possible.
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