FX.co ★ Analysis of USDX for March 07, 2014

The ADP report out of the US delivered a drastic blow to bullish expectations for a positive NFP report in February. December and January showed the US labor market which is not nearly as strong as many have anticipated. Economists expect that 150,000 jobs were added last month, up from only 113,000 jobs added in January. The US economy appears to be much weaker than expected and yesterday's ADP report suggests that today's NFP report will print the third consecutive disappointment. If the same thing happens, the US Federal Reserve may have to adjust its tapering due to economic weakness in the US. It would send conflicting signals to forex traders, and USD is likely to violent swing with more downward, sell off sharply with heavy volume.

Technical view-

The US dollar is trading below the moving average's and hammered towards the October 2013 low at $79. The US dollar made a double top at the end of January 2014, and kept on correcting itself. It was unable to move above the 50SMA. In the H4 and hourly charts, RSI is under an oversold condition, expecting a pullback with the previous support at 79.0. A break below the 79.0 mark will push it up to 78.6, 77.0, and 75.75.