The US Dollar Index (DXY) on Wednesday rallied to top 98.46 earlier in the day to set a new 4-week high before pulling back to trim weekly gains to 98.33. The USDX has been trading in a consolidative pattern since the start of the week amid a lack of momentum.
The Dollar Index is now pegged just above the 100-hour SMA while the 200-hour counterpart is several levels below, which indicates that despite the consolidative pattern, the market is enjoying a slight bullish bias.
The US Dollar Index Fundamentals Overview
From a fundamental perspective, the US Dollar Index is trading at the back of a relatively inactive week in terms of economic data. This explains the notable lack of direction in the DXY over the last three days.
The notable economic data released this week featured the US Consumer Price Index, which was mixed in outcome compared to expectations. The seasonally adjusted core CPI for October missed expectations 265.106 with 265.011. The non-seasonally adjusted equivalent beat with 257.346 versus 257.227.
On the other hand, the CPI ex-food and energy for October were in line with expectations on (MoM) with 0.2% while the (YoY) equivalent missed the expectation of 2.4% with 2.3%. But in general terms, the US CPI beat the expectation of 1.7% with 1.8% for October (YoY) while the (MoM) outcome of 0.4% was better than the expected outcome of 0.3%.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the US Dollar Index appears to have recently completed the formation of the double-bottom reversal pattern, XABCD, which culminated with the start of the current consolidative movement. The USDX continues to trade well within the normal trading zone of the RSI indicator in the 60-min chart.
Therefore, the bulls will be targeting short-term profits at around 98.46 or higher at 98.61. On the other hand, the bears will hope for a quick pullback down below towards, 98.21 or lower at 09.09.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the DXY still appears to be trading under considerable bullish pressure in an ascending channel that stretches backed April 2018. The USDX has recently bounced off the key support trendline around the 97.40 level and now targets 98.77 for the next possible pullback.
Therefore, the bulls will be targeting long-term profits at around 98.77 or higher at 98.29 and 99.73. On the other hand, the bears will be looking for the next major rebound and they could target long-term profits at 97.92, 97.42, 96.87 or lower at 96.09.