The US Dollar Index (DXY) is down considerably following today’s non-farm payroll (NFP).
The selloff started at 105.60 resistance two days ago, which isn’t surprising, given the significance of 105.60 since November.
What is surprising is the severity of today’s dollar drop.
I was initially looking for a daily close above 105.60 to confirm the next leg up.
However, today’s price action is signaling the opposite.
While the DXY hasn’t officially broken down, the index is threatening a must-hold level for dollar bulls at 104.25.
A daily and weekly close below those range lows would suggest weakness for next week.
Until then, I’ll treat this as a range trade between 104.25 support and 105.60 resistance.
A daily close below 104.25 would open up lower levels like 103.50 and 102.60.
But as mentioned above, this is a range trade while 104.25 is intact on the higher time frames.
And dollar bulls still have to deal with 105.60 if they intend to push the USD higher from this range.
A daily close above 105.60 would open up 107.80.
Lastly, remember that Friday moves can be deceiving, but only time will tell if today’s action is an exception.
