US Dollar Possible Profit Taking Actions before Nonfarm Payrolls

US Dollar: Possible Profit Taking Actions before Non-farm Payrolls

On Tuesday, the ICE U.S. Dollar Index has stabilized after briefing dropping to its weakest level in more than two years, ending up 0.1% on day to 92.31. U.S. ADP private jobs report for August will be today's focus, with an increase of 1 million expected and compared with +167,000 in July.

The closely watched non-farm payrolls report is also due on Friday, which may prompt profit taking actions by investors who hold bearish positions in the U.S. dollar.

On a daily chart, although the index posted a rebound, it is trading within the bearish channel, indicating the bearish outlook. Currently, the index stays below the declining 20-day moving average.

Investor should beware that the relative strength index indicates a bullish divergence signal, suggesting the loss of downward momentum for the index.

As long as 94.00 acts as the resistance level, the index may reach the support level at 91.50 and 89.50 on the downside.

Source: GAIN Capital, TradingView

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