USDInd: Can dollar bulls sustain momentum?
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></strong></p>
<ul>
<li><span lang="EN-US" xml:lang="EN-US">USDInd textbook uptrend approaches weekly resistance</span></li>
<li><span lang="EN-US" xml:lang="EN-US">4 potential targets, if uptrend persists</span></li>
<li><span lang="EN-US" xml:lang="EN-US">Warning: Bearish divergence spotted</span></li>
<li><span lang="EN-US" xml:lang="EN-US">Bullish scenario is invalid if prices go below 105.672</span></li>
<li><span lang="EN-US" xml:lang="EN-US">Upcoming US jobs data may dictate USDInd’s next moves</span></li>
</ul>
<h3></h3>
<h3><span lang="EN-US" xml:lang="EN-US">The bulls in the USD Index on the D1 chart have been riding high.</span></h3>
<p><span lang="EN-US" xml:lang="EN-US">T</span><span lang="EN-US" xml:lang="EN-US">he underlying US dollar index has climbed by<strong> 3.2%</strong> so far in 2023, with t</span><span lang="EN-US" xml:lang="EN-US">his textbook uptrend evident since mid-July as it posted consecutive higher tops and higher bottoms.</span></p>
<p><img decoding="async" fetchpriority="high" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/MicrosoftTeams-image%20(50).png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="3b64fee5-7de6-473f-9217-6733a9d9a5a8" data-src="/s3-static/users/user16/MicrosoftTeams-image%20(50).png" /></p>
<p><span lang="EN-US" xml:lang="EN-US">Although the bears are currently busy with a correction wave within that uptrend, the bulls seem to be gathering in numbers already. </span></p>
<blockquote>
<h3><strong><em><span lang="EN-US" xml:lang="EN-US">Will they be able to sustain their momentum and start a new impulse wave? </span></em></strong></h3>
</blockquote>
<p> </p>
<p><span lang="EN-US" xml:lang="EN-US">Let us use the fractal nature of the market structure and look at the <strong>H4 chart </strong>to see what the market is saying. </span></p>
<p><img decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/MicrosoftTeams-image%20(51).png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="b075252f-7c99-4dcd-b6d2-c6aee0656a6d" data-src="/s3-static/users/user16/MicrosoftTeams-image%20(51).png" /></p>
<p><span lang="EN-US" xml:lang="EN-US">The H4 chart reveals more details, with the most glaring being the <strong>bearish divergence</strong> between USDInd’s price chart and the MACD (Moving Average Convergence Divergence) Oscillator.</span></p>
<ul>
<li><span lang="EN-US" xml:lang="EN-US">Looking at <strong>prices</strong>, note the higher top at ”a” followed by another <strong>higher </strong>top at “b”.</span></li>
<li><span lang="EN-US" xml:lang="EN-US">Meanwhile on the <strong>MACD</strong>, note that the ‘d’ top is <strong>lower </strong>than the top at “c”.</span></li>
</ul>
<blockquote>
<h3><em><span lang="EN-US" xml:lang="EN-US">This suggests that a warning light might be flashing. </span></em></h3>
</blockquote>
<p><span lang="EN-US" xml:lang="EN-US">However, with the price being above the 50 Linear Weighted Moving Average, along with Momentum as well as the MACD Oscillator that are still in bullish territory, the uptrend may well prevail on the H4 timeframe. </span></p>
<p><span lang="EN-US" xml:lang="EN-US">Attaching a modified Fibonacci tool to a trigger level at 107.371 and dragging it to a stop loss just below a last proper swing at 105.672, four possible </span><span lang="EN-US" xml:lang="EN-US">targets can be established:</span></p>
<ul>
<li><span lang="EN-US" xml:lang="EN-US">Potential Target 1: <strong>108.051</strong></span></li>
<li><span lang="EN-US" xml:lang="EN-US">Potential Target 2: <strong>108.390</strong></span></li>
<li><span lang="EN-US" xml:lang="EN-US">Potential Target 3: <strong>109.070</strong></span></li>
<li>Potential Target 4: <strong>109.919</strong></li>
</ul>
<p><span lang="EN-US" xml:lang="EN-US">However, take note, if the price at 105.672 is broken, this <strong>upward-looking scenario</strong> is <strong>no longer relevant. </strong></span></p>
<p> </p>
<h3>From a fundamental perspective …</h3>
<p>The incoming US jobs data could also influence this US Dollar index’s price movements going into the weekend:</p>
<ul>
<li>Thursday, October 5th:<br />
<strong>US weekly initial jobless claims </strong><em>(forecast: 210k; higher than prior week’s 204k)</em></li>
<li>Friday, October 6th:<br />
<strong>US September nonfarm payrolls report </strong><em>(forecast: 170k; lower than August’s 187k)</em><br />
<strong>US September unemployment rate</strong><em> (forecast: 3.7%; lower than August’s 3.8%)</em><br />
<strong>US September average hourly earnings </strong><em>(forecast: rose 0.3% between August till September; higher than August’s 0.2% month-on-month)</em></li>
</ul>
<p> </p>
<h3>Potential Scenarios</h3>
<ul>
<li>The USDInd may<strong> resume its uptrend </strong>if shown <strong>stronger-than-expected </strong>US jobs data, that allows the Fed to trigger another rate hike by end-2023 and keep benchmark US rates higher for longer.</li>
<li>However, the USDInd may <strong>pare recent gains</strong> if shown <strong>weaker-than-expected</strong> US jobs data, that prevents the Fed from another rate hike by end-2023 while perhaps paving the way for an eventual rate cut in the second half of 2024.</li>
</ul>
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