The US Dollar Index (DXY) rallied to session highs to record a new weekly high of 97.80 after various sections of the US economy delivered promising figures. The USDX tracks the greenback against a basket of its main rival currencies and on Thursday rose from 97.45 to 97.80 within hours.
This gain added to the gains already witnessed this week in the process recouping all the losses of last week. Today’s spike has driven the US Dollar Index to the overbought territory as per the Relative Strength Index indicator.
The US Dollar Index (DXY) Fundamentals Overview
The US Dollar Index continues to benefit from a booming economy despite the recent hurdles related to trade tensions within China and the EU. The greenback benefited again on Thursday after a series of positive numbers from the US labor market.
According to this weeks report, Initial Jobless Claims in the US fell to 212k last week from 228k in the previous week. This figure was also better than the 220k forecast.
Building Permits change of 0.6% in April compared to -0.2% for the previous month was also a positive mark. Illustratively, the US Building Permits in April increased to 1.296 million versus 1.288 million previous, beating expectation of 1.290.
Housing Starts also rose to 1.235 million versus 1.168 million previous and beat the consensus estimate of 1.205 million. As such, it is correct to say that the USDX has impressive economic data to lean to going into the second half of the month. This is what is keeping traders bullish thus driving the US Dollar index to weekly highs.
The US Dollar Index (DXY) Technical Analysis (the 60-min Chart)
Technically, the pair still remains pegged within a descending wedge, which suggests that in the intermediate time frame, the bears retain some level of control. However, the bulls will claim control in the short-term.
As such, the bulls will target profits at around 23.60% Fib level at 97.90 while the bears will look to pounce by targeting the 38.20% Fib level at 97.70. More opportunities can be found above and below the two short-term targets for both sets of traders.
The US Dollar Index (DXY) Technical Analysis (the daily Chart)
In the daily chart, the USDX appears to have a bullish bias in the long-term. The pair has been trading within an ascending channel since mid last year and that trend has not changed.
The 100-day and the 200-day moving average lines support the bullish case while the RSI shows that the DXY is yet to reach the overbought territory.
In summary, the bulls will be more optimistic in the long-term view but the bears will be on toes to trade on every pullback that comes their way.