The U.S. Dollar Index (DXY) has been exhibiting volatility in recent sessions, displaying an attempt to recover amid a mix of economic signals. The unexpected rise in unemployment has cast some doubts on the strength of the USD.
Technical analysis: The DXY has found interim support above the ascending trendline, depicted by the black line, which has been guiding the index higher from previous lows. The recent bounce off this trendline suggests that the market is not fully convinced of a bearish scenario, despite higher unemployment figures. If the DXY can maintain above the trendline and breach the 104.60 resistance level, it may signal a shift towards bullish sentiment, potentially targeting higher levels towards 105.20. On the contrary, a break below the trendline could reaffirm the bearish outlook and could lead to a retest of the lower support zone around 103.00.
Our position: We remain bearish given the economic state, with a higher-than-expected unemployment rate and impending NFP data. If the index sustains its climb and breaks through the current resistance, we might consider long positions. However, we are prepared to continue with our bearish strategy, especially if the NFP data further implies economic weakness.
Technical analysis: The DXY has found interim support above the ascending trendline, depicted by the black line, which has been guiding the index higher from previous lows. The recent bounce off this trendline suggests that the market is not fully convinced of a bearish scenario, despite higher unemployment figures. If the DXY can maintain above the trendline and breach the 104.60 resistance level, it may signal a shift towards bullish sentiment, potentially targeting higher levels towards 105.20. On the contrary, a break below the trendline could reaffirm the bearish outlook and could lead to a retest of the lower support zone around 103.00.
Our position: We remain bearish given the economic state, with a higher-than-expected unemployment rate and impending NFP data. If the index sustains its climb and breaks through the current resistance, we might consider long positions. However, we are prepared to continue with our bearish strategy, especially if the NFP data further implies economic weakness.