US Dollar Index Extends Declines Below 94.00 Ahead of GDP Data

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The US Dollar Index on Tuesday extended the current declines towards 93.87 off Sep. 25 highs of 94.72. This comes ahead of a crucial period in the US market. The USDX is now trading just off the 200-hour SMA while the 100-hour SMA is a few levels higher. 

The US Dollar currency index has now moved closer to oversold levels of the 14-hour RSI in the 60-min chart. This could trigger a temporary rebound in the DXY. 

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the US dollar currency index is trading ahead of a crucially busy period in the US market. The month of October marks the start of another major earnings season in the US stock market. Depending on how company earnings results come out, this could be significant for the movement of the US dollar index. But before that, traders will be looking forward to Wednesday’s presidential debate pitting incumbent President Trump and Democratic candidate Joe Biden.

From an economic perspective, the US gross domestic product for Q2 will also be released tomorrow. The market expects a change of -31.7% on an annualized basis, the same as the previous reading. The (QoQ) data is expected to reflect a -2% change versus -2.3% change previously. The US ADP Employment Change for Sep. will also come out on Wednesday. The market expects 648k jobs versus the previous reading of 428k. Later in the week, the US ISM Manufacturing PMIs and the non-farm payrolls for September will also be announced.

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

Technically, the USDX appears to be trading within an ascending channel in the 60-min chart. This indicates a relatively short-term bullish bias in the market sentiment. The DXY’s recent pullback has, however, pushed it closer to oversold levels of the 14-hour RSI. It is also trading just off the 200-hour SMA support. This could trigger a rebound.

The bulls will be targeting short-term rebound profits at around 94.26 or higher at 94.72. On the other hand, the bears will target profits at around 93.50 or lower at 93.00.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the DXY appears to be trading within a sharply descending channel. The bulls have recently rallied the dollar index to the verge of a bullish breakout. It is now trading closer to overbought levels of the 14-day RSI.

The bulls will target profits at around 95.10 or higher at 38.20% Fib level at 96.00. On the other hand, the bears will target long-term profits at around 92.73 or lower at 0.00% Fib level at 91.69.

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