EURUSD Euros and Dollar bills

DXY: US Dollar Index Forecast Ahead of NFP Data

The US dollar index (DXY) is in its sixth straight day of gains ahead of the important US nonfarm payroll numbers. The index is trading at $91.58, which is the highest it has been since December 1.

DXY news: The US dollar has been on a strong upward momentum in the past few days. This performance is partly because of the ongoing debate about stimulus in the United States. 

While Joe Biden has proposed a $1.9 trillion package, some members of his own party have suggested major cutbacks. For example, Joe Manchin of West Virginia has criticized the plan to provide $1,400 stimulus checks to all Americans. Therefore, it seems like the next package will be relatively smaller than expected.

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The dollar index is also rising ahead of the important US nonfarm payroll numbers. Economists believe that the economy added more than 50,000 jobs in January while the unemployment rate remained unchanged at 6.7%. Strong jobs numbers will possibly push the DXY higher because it will remove the incentive for the Fed to provide more stimulus.

Dollar index technical outlook

Turning to the daily chart, we see that the dollar index has made some gains recently. In fact, it has risen by more than 2.80% from its lowest level this year. Also, the index has formed what seems like an inverted head and shoulder pattern and moved above the 25-day and 15-day moving averages. Therefore, the likely scenario is where the index continues to rise as bulls eye the vital resistance at $92.55.

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DXY technical chart

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