The US Dollar Index on Friday extended the current weekly gains to a new monthly high of 98.81 before pulling back late on to settle at 98.30. The USDX has been on a bullish run this week following Trump’s announcement of a travel ban for Europeans into the US. The DXY has since crossed over and above the 100-hour and the 200-hour SMA. 

This shows a short-term bullish bias in the market sentiment. The dollar index has hit overbought levels of the RSI in the 60-min chart. This triggered today’s late pullback.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the US dollar index is trading at the back of a busy period in the US market. President Trump announced that Europeans had been banned from entering the country amid the coronavirus pandemic. The only exception was the UK. This is one of the measures taken to combat the spread of the deadly virus.

The announcement comes at the back of a series of key economic decisions made by the US government. The Federal Reserve cut the funds rate by 50 basis points to 1.25% down from 1.75%. This week, the US CPI for February beat the (MoM) expectation of o.0% with 0.1%. The CPI ex-food and energy beat the (YoY) estimate of 2.3% with 2.4% but came in line with the (MoM) estimate of 0.2%. 

On Thursday, the producer price index ex-food and energy came short of the (YoY) expectations of 1.7% with 1.4%. The (MoM) outcome of -0.3% was also below the expectation of 0.1%. Both the initial and continuing claims were better than expected.

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

Technically, the USDX appears to be experiencing a short-term bullish bias in the market sentiment. It has crossed over the key 100-hour and 200-hour SMA lines. This has pushed it to overbought levels but Friday’s late pullback could change that.

The bears will be targeting short-term pullback profits at around 97.65 or lower at 97.16. On the other hand, the bulls will look to retain short-term control by targeting profits at around 98.82 or higher at 99.28.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the US dollar index appears to have made a sharp recovery. This comes after it fell off a gently climbing channel that shows a long-term bullish bias in the market sentiment. 

The bulls will look to extend gains towards 99.49 or higher 100.78 going into next week. On the other hand, the bears will target profits at around 97.20 or lower at 95.21.