The U.S. Dollar is edging higher against a basket of major currencies on Friday, recovering most of its losses following dovish comments from U.S. Federal Reserve Chairman Jerome Powell on Wednesday.

Firm U.S. Treasury yields are helping to boost the dollar’s appeal as well as a weaker Euro, which is a major component of the dollar index, representing about 57% of its value.

At 08:14 GMT, September U.S. Dollar Index futures are trading 92.710, up 0.079 or +0.09%.

The index has climbed in recent weeks as investors get more optimistic about the outlook for the greenback, driven by an increasingly upbeat assessment of the U.S. economy by the Federal Reserve, which has brought forward the time frame on when it will next raise rates.

On Thursday, the greenback was helped by U.S. data that showed the number of Americans filing new claims for unemployment benefits fell the week-ending July 9 as the labor market steadily gains traction.

Daily September U.S. Dollar IndexDaily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 92.835 will signal a resumption of the uptrend. A move through 92.075 will change the main trend to down.

The minor trend is also up. A trade through 92.275 will change the minor trend to down and shift momentum to the downside.

Currently, the index is trading on the strong side of a pair of retracement zones, supporting its upside bias. The first retracement zone is 92.495 to 91.850. The second retracement zone is 91.950 to 91.490. Inside these zones is a pivot at 92.175.

With the main trend up, all of these levels are potential support, the best being the price cluster at 91.950 to 91.850.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the September U.S. Dollar Index on Friday is likely to be determined by trader reaction to 92.495.

Bullish Scenario

A sustained move over 92.495 will indicate the presence of buyers. If this move creates enough upside momentum then look for buyers to take a run at 92.835. This is a potential trigger point for an acceleration to the upside with 93.430 the next potential upside target.

Story continuesBearish Scenario

A sustained move under 92.495 will signal the presence of sellers. This could lead to a labored break with support lined up at 92.275, 92.175, 92.075 and 91.995. These are followed by the support cluster at 91.950 to 91.850.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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