US Dollar Index Extends Pullback Towards 98.00 After Rate Cut

Free $100 Forex No-Deposit Bonus

The US Dollar Index (DXY) has pulled back over the last two days to edge towards the 98.00 level after spiking early in the week to trade just under the 99.00 level.

The USDX has been trading within an upward trending wedge since the middle of last month. However, it made a bullish breach of the trendline resistance on Wednesday before pulling back on Thursday and Friday to make another breach (bearish) and head towards $98.00.

It is now testing the 200-hour MA support, which appears to be standing firm. The pullback comes after the US-China trade war threatened to escalate after Trump’s latest move.

The US Dollar Index (DXY) Fundamentals Overview

From a fundamental perspective, the US Dollar Index (DXY) is trading at the back of two major developments in the US economy. Aside from Friday’s non-farm payrolls, which were in line with ex[ectations at 164k jobs, a lot has happened in the last two days.

On Wednesday, the US Federal Reserve cut the base interest rate by 25 basis points. This ent the US equities and the greenback plunging. And a day later, President Trump announced that the US will impose 10% trade tariffs on $300 billion worth of Chinese goods.

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

From a technical viewpoint, the US Dollar Index (DXY) appears to be pegged between the 100-hour and the 200-hour MA line in the 60-min chart. Despite the recent pullback, it still appears to enjoy a strong bullish bias. This sets it up well for trading in the coming days.

The bulls will be targeting profits at around 98.21 or higher at 98.42 in the short-term. On the other hand, the bears will target profits at around 97.98 or lower at 97.77 within the same time frame.

The US Dollar Index (DXY) Technical Analysis (the Daily Chart)

In the daily chart, the USDX still appears to be enjoying a modest bullish bias in an ascending wedge. This comes as part of a corrective movement that dates back to the start of 2018 when the DXY bottomed after a long bearish run.

The current level of the US Dollar Index creates an interesting trading opportunity going into next week. The bulls will target long-term profits at around 98.97 while the bears will look to pounce by targeting long-term opportunities at around 97.24.

In summary, the USDX has recently pulled back after a flurry of financial events (rate cut, Non-Farm Payrolls, and US-China trade war) hit the greenback. However, the bulls appear to be in control both in the near term and the long-term time frames.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.