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USDOLLAR Braces for NFPs- Rally to Offer Favorable Short Entries

USDOLLAR Braces for NFPs- Rally to Offer Favorable Short Entries

2016-03-31 17:17:00
Michael Boutros, Strategist

Talking Points

  • USDOLLAR eyes near-term structural support ahead of NFPs
  • Broader outlook remains bearish sub 11985
  • Updated targets & invalidation levels


USDOLLAR Braces for NFPs- Rally to Offer Favorable Short Entries

Chart Created Using FXCM Marketscope 2.0

Technical Outlook: The Dow Jones FXCM U.S. Dollar Index (Ticker: USDOLLAR) is working on its fifth day of consecutive declines after reversing off confluence resistance at 12030 noted on Monday. Heading into Non-Farm Payrolls tomorrow, the immediate short-bias is at risk while above the median line extending off the yearly high with interim resistance eyed at the 50-line (red) backed by 11970. Our broader bearish invalidation level is now lowered to Monday’s outside-day reversal close at 11985- note that the upper median-line parallel converges on this level over the next few days. A break lower targets the 76.4% retracement at 11793 backed by a key support confluence at 11721/31.

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USDOLLAR Braces for NFPs- Rally to Offer Favorable Short Entries

Notes: Interim support is eyed at 11846/54 where the October low converges on the March low & the median-line extending off the weekly high. A break below this threshold targets subsequent support objectives at the broader median-line extending off the January 21st high (~11820) and the 76.4% retracement of the advance off the May low at 11793.

A breach above the 50-line risks a rally back towards the upper median-line parallel before resuming lower. Keep in mind tomorrow’s NFP release comes on the start of the month / quarter and we’ll want to remain nimble & lower leverage heading into the weekend. Consensus estimates are calling for a print of 205K jobs for the month of March with the headline unemployment rate widely expected to hold steady at 4.9%. Traders will also be closely eyeing the broader labor force participation rate as well as the wage inflation figures.

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Relevant Data Releases

USDOLLAR Braces for NFPs- Rally to Offer Favorable Short Entries

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.