US Dollar Index Bounces Off Trendline Support After US Data

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The US Dollar Index (DXY) on Friday bounced off the trendline support at 97.95 to surge towards 98.40 after the latest round of US economic data. The dollar index made a bearish breakout off a sideways channel on Thursday after taking a short-term bearish trend last week.

Today’s late rebound pushed the USDX back to the normal trading zone of the 14-hour RSI after momentarily drifting to oversold levels. The DXY remains a few pips below the 100-hour and the 200-hour SMA lines in the 60-min chart.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the US dollar index is trading at the back of a relatively mixed period in the US market. On Friday, the Chicago Purchasing Managers’ index missed the expectation of 40 with 32.3. A few minutes later, data from the Michigan Consumer Sentiment index also came short of expectations with 72.3 versus 74. Personal Spending for April and core personal consumption expenditure also came short of -12.6% and 1.1%, respectively with -13.6% and 1%. On the other hand, personal income for April impressed with 10.5% versus -6.5% (MoM).

Earlier in the week, the initial jobless claims missed the expectation of 2.1M with 2.123M. Annualized Gross Domestic Product for Q 1 also came short of -4.8% with -5%. However, non-defense capital goods ex-aircraft for April beat -10% with -5.8% while a change of -17.2% in durable goods orders was better than the expectation of -19%. Preliminary Q1 GDP and durable goods orders ex-transportation also outperformed expectations.

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

Technically, the USDX appears to be trading within a short-term descending channel off a sideways channel. This indicates an attempt by the bears to assume control after a long period of seesaw movement.

Therefore, the bears will be targeting short-term profits at around 97.95 or lower at 97.48. On the other hand, the bulls will look to pounce for profits at around 98.78 or higher at 99.31.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the US Dollar Index appears to have recently made a bearish breakout off a slightly ascending channel. The bears might be trying to seize control from the bulls. The pair is currently pinned just above the 61.80% Fib level.

The bulls will be targeting long-term profits at around 50% and 23.60% Fib levels at 99.78 and 101.03, respectively. On the other hand, the bears will target profits at around 76.40% Fib level at 96.64 or lower at 95.53.

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