US Dollar Index (DXY) Higher Ahead of Nonfarm Payrolls Report

New York (April 7)  The US Dollar Index (DXY) is testing the high of the week established at 100.85 ahead of the US nonfarm payroll report. DXY is currently trading at 100.83, a gain of 0.11% over Thursday’s close.

Volatility is expected to increase however, at the time of the 08:30 ET data release. Further sustained upside could be difficult to produce, as the Stochastic is currently at a fully overbought level. In addition, investors are maintaining a cautious stance following the US missile strike on Syria.

However, should DXY move higher following the release of the data and take out the 100.85 level, the next level of resistance is at 100.95, which represents a 61.8% retracement of the March decline. On a sustained move above this area, the probabilities of a return to the March high would increase, resulting in a move to the 102.26 level.

First support for the dollar is at 100.50, followed by 100.25, which represents the low established March 31.

In regard to the US jobs report, a reading of 180K is expected for March, following a reading of 235K in February. Expectations for the report are high, given the ADP Employment Change reported on Wednesday, which came in much better than expectations at 263K. A stronger than expected nonfarm payroll report will suggest the Federal Reserve will have to raise rates more aggressively, a development that would be supportive to the dollar.

Source: EconomicCalendar