The US Dollar Index on Thursday rallied to hit a new yearly high of about 91.53 following the latest round of US data. The USDX continues to trade within an ascending channel formation in the 60-min chart.
It has now rallied several levels above the 100-hour and the 200-hour SMA lines. The US dollar currency index pulled back late on to return to the normal trading zone of the 14-hour RSI. The USDX had earlier ventured into overbought levels.
The US Dollar Index Fundamentals Overview
From a fundamental perspective, the US dollar index is trading at the back of a relatively busy period in the US market. On Thursday, the initial jobless claims for the week ending Jan. 29 beat the expectation of 830k with 779k. The continuing claims for the preceding week also outshone 4.7M with 4.592M.
On Wednesday, the ISM Services PMI for January beat the expectation of 56.8 with 58.7. The ADP employment change for the period also came in better than expected with 174k versus an expectation of 49k. The Markit Services PMI and the PMI Composite for January also outperformed estimates.
Earlier in the week, the ISM Manufacturing PMI for January missed the expectation of 60 with 58.7. The Markit Manufacturing PMI for the period came in slightly better than expected with 59.2 versus 59.1.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the US dollar index appears to be trading within a gently ascending channel formation in the 60-min chart. This indicates a significant short-term bullish pressure in the market sentiment. The DXY recently pulled back to return to the normal trading zone of the 14-hour RSI.
The bulls will be targeting short-term profits at around 91.77 or higher at 92.03. On the other hand, the bears will be looking for potential short-term pullbacks at around 91.27 or lower at 91.00.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the USDX appears to have recently made a bullish breakout from a sharply descending channel formation. The dollar index is now closer to crossing to overbought levels of the 14-day RSI. This indicates an abrupt change in market sentiment from bearish to bullish.
The bears will be looking to retain long-term control by targeting profits at around 90.50 or lower at 89.15. On the other hand, the bulls will target profits at around 92.71 or higher at the 61.80% fib level at 93.89.