The US Dollar Index Pulls Back Below 99.00 After Weak US Data

By Nicholas Kitonyi October 3, 2019, 11:52 pm • Posted in Forex

The US Dollar Index (DXY) pulled back again on Thursday to drop below the key level 99.00 after another disappointing round of US data. The US Currency INdex has been on a downward trend since the start of the month during the worst starts to a financial quarter since 2009.

The downward trend is coming at the back of a major rally late last month and the USDX now appears to have wiped nearly all the gains made last week.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the USDX is trading at the back of what has been a disappointing week so far. On Tuesday, the ISM Manufacturing PMI (Sep) missed expectations of 50.1 with a 10-year low score of 47.8. This triggered the massive plunge in the DXY before yesterday’s attempted recovery.

Later yesterday, the decline continued after the ISM-NY Business Conditions Index (Sep) missed with 42.8 versus an expectation of 47.5. The ADP Employment Change (Sep) also missed expectations of 140k jobs with 135k jobs.

And on Thursday, the USDX faced more pressure after the ISM non-Manufacturing PMI (Sep) also missed expectations of 55 with 52.8. The Initial Jobless Claims also came short of expectations at 219k versus 215k while the continuing jobless claims narrowly missed with 1.651 versus 1.645.

The US Dollar Index Technical Analysis (the 60-min Chart)

Technically, the US Dollar Index appears to have made a trend reversal with the latest series of declines after a steady bull-run towards the end of last month. The USDX now appears to have found support just above 98.60 after making a short-term rebound late o Thursday.

This creates some interesting bullish opportunities at around 99.05 and higher at 99.20 while the bears will be looking to pounce at around 98.81 or lower at 98.68.

The US Dollar Index Technical Analysis (the Daily Chart)

I the daily chart, the DXY appears to be trading in a consolidative bullish triangle which indicates a bullish bias in the market sentiment. The Dollar Index is trading several pips above the 100-day and the 200-day MA lines, which means that the bears will also be optimistic in the long-term as they target pullbacks towards the MA lines.

The bears will target profits at around 98.46 or lower at 98.00 while the bulls will hope that the bull-run can continue towards 99.27 or higher at 99.65.

In summary, the US Dollar Index appears to be experiencing intense short-term bearish pressure but in the long-term, the bulls still retain control.