At August’s close, the USD has performed exceedingly well against its trading partners. The DXY climbed 3.2% over the month. Now it heads into a very important nonfarm payrolls result, and investors will look for clues as to the USD’s next move.
The nonfarm payroll data for August was released on Sept. 2, 2022, and is perhaps more eagerly anticipated than usual. The reasons for this are detailed in Monday's market review.
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.
Movements of other currencies against the USD were as below:
- GBP/USD, fell by 5.2%
- NZD/USD, fell by 2.9%
- EUR/USD, fell by 2.1%
- AUD/USD, fell by 1.9%
- USD/INR, rose by 1.4%
- USD/RUB, rose by 1.7%
- USD/CAD, rose by 2.1%
- USD/CHF, rose by2.5%
- USD/JPY, rose by 5.3%
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 may suggest 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 minds. 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.