Yesterday, the US Dollar Index momentarily spiked to hit a new weekly high of 98.00 before plunging to set new weekly lows of about 97.20. The USDX continues to trade on a downward trending rhythm with the latest rebound only forming to complete a dead cat bounce pattern.
The DXY has recently bounced off the oversold levels of the RSI indicator in the 60-mi chart, as it attempts to consolidate losses above the 97.30 level.
The US Dollar Index (DXY) Fundamentals Overview
From a fundamental perspective, the USDX is trading at the back of a key Federal Reserve decision economic data that came out mixed. The Fed cut the funds rate by 25 basis points to 1.75% down from 2.00% in the previous interest rate decision.
On the other hand, ADP employment change beat expectations of 120k jobs with 125k jobs while core personal consumption expenditures exceeded the expectation of 2.0% with 2.2%. On the other hand, annualized Gross Domestic Product beat the forecasted figure of 1.7% with 1.9%.
And on Thursday, continuing jobless claims missed the expectation of 1.68M after posting 1.69M claims while the initial jobless claims of 218k were higher than the expected claims of 215k. The Chicago Purchasing Managers Index for October slid from the previous month’s rating of 47.1 to 43.2 in the process missing the expectation of 48.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the US Dollar Index appears to be trading under extreme bearish pressure in a decaying downward cyclical wave. This signals a loss of momentum in the USDX’s current trend, which could eventually trigger a major trend reversal.
Therefore, the bulls will be targeting short-term profits at around 97.41 or higher at 97.54 while bears will hope for a continuation of the current bearish movement towards 97.26 or lower at 97.10.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the DXY still appears to be experiencing a bullish bias in the market sentiment. However, the latest pullback has pushed the US dollar benchmark index towards the support trendline thereby flirting with a potential breakout.
The bears will hope that this breakout happens soon and they could target long-term profits at around 96.66, 95.85, or lower at 95.23. On the other hand, the bulls will hope for an immediate rebound towards 97.95, 98.72 or higher at 99.30.