US Dollar Index Bounces Off 27-Month Lows on Positive US Jobs Data

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The US Dollar Index (DXY) on Friday bounced off a new 27-month low of about 92.51 to surge above 93.50 after an impressive round of US jobs data. The USDX now appears to be on course to complete a XABCD double-bottom reversal pattern after an extended period of declines that dates back two months.

The latest rebound has pushed the DXY closer to overbought levels of the 14-hour RSI in the 60-min chart. Friday’s surge also pushed it above the 100-hour and the 200-hour SMA lines.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the dollar index is trading at the back of a relatively busy week in the US market. Besides the ongoing earnings season for Q2, the markets also entertained a series of key economic data throughout the week. On Friday, the US non-farm payrolls for July beat the expectation of 1.6 million with 1.763 million jobs. The average hourly earnings for the month also outperformed the (YoY) expectation of 4.2% with 4.8% while the unemployment rate came in at 10.2%, slightly lower than the expectation of 10.5%.

Earlier in the week, the US ISM Manufacturing PMI for July beat the expectation of 53.6 with 54.2. The ISM Manufacturing Prices Paid and New Orders Index also beat 52 and 46.8, respectively with 53.2 and 61.5. On the other hand, the ISM Manufacturing employment index missed 48.3 with 44.3 while the Markit Manufacturing PMI came short of 52 with 50.9. On Wednesday, the ISM Services PMI beat 55 with 58.1 while Services New Orders Index outperformed 64.7 with 67.7. Services prices paid and employment index came short of expectations.

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

Technically, the US Dollar Index appears to have recently bounced off new multi-month lows amid strong bearing pressure. The USDX is now on course to complete a XABCD double-bottom reversal pattern. This has pushed it closer to overbought levels in the 14-hour RSI.

The bulls will look to extend the gains towards 93.77 or higher to 94.01. On the other hand, the bears will target short-term pullback profits at around 93.21 or lower at 92.96.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the DXY appears to be trading within a sharply descending channel. This indicates a strong long-term bearish bias in the market sentiment. Today’s rebound pushed the dollar index off oversold levels in the 14-day RSI.

The bulls will be targeting long-term rebound profits at around 94.48 or higher at 95.45. On the other hand, the bears will look to retain long-term control by targeting profits at around 92.65 or lower at 91.75.

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