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Dollar Index Technical Update November 2nd 2012

Dollar Index Technical Update November 2nd 2012

US Dollar Index Update 2/11/12 – Dollar Stronger Following NFP – US Jobs Data

  • Sentiment overview – the US Dollar index is now trading above recent range resistance and is finishing the week strongly following a higher than anticipated NFP (Non Farm Payrolls) headline figure.  A higher than anticipated increase in Non-farm Payrolls, and associated improvement in the jobs market, benefits the dollar as it helps remove expectations of additional Fed stimulus.
  • The NFP figure of 171k jobs for October topped consensus expectations of 125K.  In addition to this is the fact that more people were hired over the previous two months than previously reported as per monthly revisions, which has seen the dollar index break above the stubborn 80.20 area resistance area.
  • This dollar index strength scenario comes as EURUSD breaks below the 1.2880 area support level and is trading near the 200 day SMA once again, GBPUSD has moved to the downside following a Pin Bar reversal yesterday and the USDJPY has printed a new 6-month high following the positive NFP report.  
  • Gold, which often (but not always) moves inversely to the US Dollar,  has had one of the worst days seen in months and is now down 2.13% on the day – over $30.  
  • The yield was little changed on benchmark 10-year Treasury notes at 1.72%.
  • The USDX is now at 80.52, the FE100 of 78.61 > 80.18 > 78.94, with the 38.2% Fibonacci retrace of the last swing lower just above at 80.69.
  • The 50% retrace comes in at 81.30 and may prove to be a key area for the USDX.  Looking at the weekly timeframe dollar index chart the 81.30 area is a price pivot zone which has seen the dollar index turn as previous resistance, and more recently support on the 17/6/2012 weekly candle.  With this in mind there is once again potential for resistance at the 81.30 area if price moves to the upside going forwards.
  • The broken trend line shown in figure 1 – which started from the early September 78.60 area lows – has held as support for three subsequent daily lows now despite being broken during the key reversal.   
Dollar Index Daily (figure 1)

dollar index daily 2012 11 Dollar Index Technical Update November 2nd 2012

Dollar Index Weekly (figure 2)

usdx weekly 2012 11 02 Dollar Index Technical Update November 2nd 2012

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