The U.S. Dollar is trading lower against a basket of major currencies on Monday after failing to follow-through to the upside following Friday’s potentially bullish closing price reversal bottom.
Lower Treasury yields are likely behind some of the selling, but a recovery in the U.S. stock market overnight is likely fueling most of the selling pressure. Traders who flocked to the dollar for safe-haven protection on Friday as stocks sold off sharply are likely liquidating their hedge positions.
At 08:02 GMT, September U.S. Dollar Index futures are trading 92.000, down 0.188 or -0.20%.
Later today at 14:00 GMT, traders will get the opportunity to react to the latest data on U.S. ISM Manufacturing PMI. This report will help investors gauge the strength of the economy ahead of Friday’s major U.S. Non-Farm Payrolls report.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum may be getting ready to shift to the upside with the formation of a potentially bullish closing price reversal bottom on Friday.
A trade through 92.215 will confirm the closing price reversal bottom. This won’t change the main trend to up, but it could trigger the start of a 2 to 3 day correction.
A move through 91.780 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The nearest support is a pair of retracement levels at 91.950 and 91.850. Traders have tested this area three sessions in a row.
The next potential support is another pair of retracement levels at 91.490 and 91.370.
On the upside, the nearest resistance is a long-term Fibonacci level at 92.495.
Daily Swing Chart Technical Forecast
The direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to 92.215.
A sustained move under 92.215 will indicate the presence of sellers. This could lead to a labored break with a series of levels slowing down the selling pressure. They come in at 91.950, 91.850 and 91.780.
Taking out 91.780 could trigger an acceleration into a support cluster at 91.505 to 91.490.
Taking out 92.215 will confirm the closing price reversal bottom. This could trigger a short-term surge into 92.495.