The USD Index has faltered intraday, as fears of early tapering by the Fed appear to have eased for now.
The latest jobs reports (NFP and Jobless Claims) indicate that the US labour market continues to recover. However, an uptick in the unemployment rate also shows that the labour market recovery is not yet at the levels where the Fed would consider early tapering.
On the horizon for the week is the FOMC Minutes, where the markets will seek to digest the thinking of the FOMC governing council in churning out projections and a rate statement which were perceived as hawkish, only for several Fed members to walk back on the hawkish expectations.
The USD Index is slighly higher on the day (0.01%), but has shed some of its earlier gains.
Technical Outlook for USD Index
The bearish engulfing candlestick pattern could still be relevant after Monday’s attempted pullback to the upside met resistance at the 92.32 price level. This could set up an extension of the downside correction as a follow up from the bearish candle pattern, targeting 92.00 and 91.50 as the immediate downside targets. A further decline opens the door towards 91.26 and 90.96.
On the other hand, the price needs to break the 92.80 price level, taking it above the high of the day 2 engulfing candle, to restore the continuation of the recovery. This move would have 93.17 and 93.43 (high of the 31 March doji) as additional upside targets.