The US Dollar Index attempt to recover from this week’s decline failed on Friday after it pulled back on its way up. Last week, the US Dollar Index had advanced to record a new yearly high of 97.71 before pulling back towards the end of the week.
Those declines continued early this week with the US Dollar Index falling from a weekly high of about 97.40 to hit a weekly low of about 96.50 basis points. Currently, the DXY is hovering just around the 96.55 level, which suggests that a retest of the weekly low could be on the cards before the end of the week.
US Dollar Index (DXY) Fundamental Analysis
Fundamentally, the DXY is driven by positive US economic data and a bullish stock market. A favorable political climate also plays to the hands of the US Dollar Index (DXY).
As witnessed over the last few months, the US stock market has been bullish, which is why the US Dollar Index has rallied to hit new yearly highs. The US-China trade talks have also eased the mood in the political corridors while in general, economic data has also remained steady despite a few mixed views.
US Dollar Index (DXY) Technical Analysis (the 240-min Chart)
From a technical perspective, the US Dollar Index (DXY) appears to be headed towards the current weekly lows, but given the fact, the US markets have just opened in the last hour, a lot could happen before the day’s end.
Nonetheless, the bulls will look to target profits at around the 96.68 points level in the short-term while the bears’ immediate target will be 96.40 should the DXY endeavor to breach weekly lows.
US Dollar Index (DXY) Technical Analysis (the Daily Chart)
In the daily chart, the performance of the DXY becomes clearer with what looks like a slightly bullish base acting as support while a curved top plays the role of resistance.
By plotting the Fib retracements in the chart, it looks like the DXY is currently trading between the 20-day and the 50-day moving average lines suggesting a potential consolidation in the short-term.
In summary, given the Fib levels, the bulls will target profits at around 96.74 points level, which coincides with the 61.80% Fib level, while the bears will aim for opportunities around the 38.20% Fib level at 96.01.