US Dollar Index Extends Weekly Declines Near 2-Year Lows

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The US dollar index on Friday extended the current weekly losses to a new 22-month low of about 94.44 following the latest round of US data. The USDX continues to trade within a sharply descending curve in the 60-min chart amid increased selling pressure.

The DXY is now testing the boundary to the oversold levels of the 14-hour RSI following today’s plunge. The dollar index also continues to trade well below the current level of the 100-hour and the 200-hour SMA lines.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the US dollar index is trading at the back of a relatively busy period in the US market. The US is prepping for another round of $2 trillion worth of stimulus package amid the coronavirus pandemic. This comes at a time when the latest economic data displayed mixed results. Earlier in the week, the Chicago Fed. National Activity Index for June beat the expectation of 3.24 with 4.11. On Wednesday, the housing price index for May missed the (MoM) expectation of 0.3% with -0.3%.

Existing homes sales and home sales change for June missed the (MoM) expectation of 4.78M and 24.5% with 4.72M and 20.7%, respectively. On Thursday, the initial jobless claims for last week missed 1.3M with 1.416M while continuing claims for the week before beat 17.067M with 16.197M. On Friday, the preliminary US Markit Manufacturing and Services PMIs for July missed 51.5 and 51 with 51.3 and 49.6. New home sales and home sales change outperformed expectations.

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

Technically, the US Dollar Index (DXY) appears to be trading within a sharply diving curve in the 60-min chart. This indicates a strong short-term bearish bias in the market sentiment. The bears will be looking to extend the current run of declines towards 94.02 or lower to 93.61. On the other hand, the bulls will look to pounce for short-term rebound profits at around 94.83 or higher to 95.22.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the USDX appears to have recently plunged after failing with an attempted recovery. The dollar index is now hugging the trendline support in a sharply descending channel. This indicates a strong long-term bearish bias in the market sentiment. 

The bulls will target rebound profits at around 95.80 or higher at 97.33. On the other hand, the bears will look to extend the declines towards 93.22 or lower to 92.06.

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