At August’s close, the USD can be said to have performed exceedingly well against its trading partners. The DXY climbed 3.2% over the month. Now the US heads into a very important Non Farm Payrolls result, and investors will be looking for clues as to the USD’s next move.
The Non Farm Payroll data for August is released on September 2, 2022, and is perhaps more eagerly anticipated than normal. The reasons for this are detailed in Monday's market review Pound and gold head lower before NFP data.
The worst performing USD pair over the past month has been the Pakistani rupee (USD/PKR), which fell by more than 8.0%. But this movement against the USD was far from the norm.
The movements of other currencies include:
We can look at the DXY chart on the monthly timeframe to try to ascertain whether the USD can sustain this upside momentum.
Thus far, technical analysis is possibly suggesting that the US dollar still has plenty of space to move toward the upside.
The monthly candle’s 107.500 resistance area, which is now broken, opens traders to scope out higher levels of resistance including 110.00 and 116.500. The former of which the Dollar index is currently butting up against.
Further afield, traders may want to keep the 2-decade high of 120.000 in the back of their mind. Such a lofty prediction is seemingly backed-up by an upcoming US Federal Reserve interest rate decision.
On the other hand, traders should be wary as well. The price could also create a monthly pullback as the Williams %R indicator is currently planted in the extreme upper range above 20%, which indicates that the price might be in overbought territory.