DXY Trending Downwards Prior to NFP numbers

Fundamental brief overview

The DXY is starting to trend lower before the release of the NFP data later. The past two NFP showed exceedingly large deviations from prior consensus forecasts – but in opposite directions. May’s data, released in early June, showed a colossally disappointing 38,000 jobs added in May against prior expectations of 160,000. This was later revised even further down to a minuscule 11,000 jobs added. In sharp contrast, June’s numbers, released early last month, revealed an exceptionally positive 287,000 additional jobs versus prior expectations of 175,000.

Earlier this week, the US ADP Employment Change report showed private businesses in the United States hired 179 thousand workers in July 2016 compared to an upwardly revised 176 thousand in June and above market expectations of 170 thousand. It was the biggest gain in four months, as the service-providing sector added 185 thousand jobs, boosted by professional and business (+59 thousand), trade, transportation and utilities (+27 thousand) and financial activities (+11 thousand). Meanwhile, the goods-producing sector lost 6 thousand jobs, as construction shed 6 thousand while manufacturing added 4 thousand. Midsized companies were the ones hiring more (68 thousand), followed by small (61 thousand) and large (50 thousand). The question is, will the NFP numbers follow suit with a minor increase?



Technical Insights



Short term time frame: DXY (30min chart)

Trend analysis: Bullish (50 SMA above 200 SMA).

Levels analysis: Critical support level at 95.00 and critical resistance zone at 95.85 - 95.90.

Price action analysis: Price has broken down from an uptrend

Summary: I am actually quite bearish bias in this pair. With such a high increase last month in the NFP numbers, I am expecting a poorer NFP numbers this month and technically, the price is also showing signs of bearishness.