US Dollar Index Plunges to a New 26-Month Low as Q2 GDP Disappoints

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The US Dollar Index on Thursday plunged to a new 26-mon low of about 92.96 following the release of the latest US gross domestic product data. The dollar index continues to experience intense bearish pressure in a sharply diving curve. 

The USDX is now trading several levels below the current level of the 100-hour and the 200-hour SMA line in the 60-min chart. The DXY has since ventured into oversold levels of the 14-hour RSI. This could trigger a short-term rebound.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the USDX is trading at the back of a relatively busy period in the US market. The earnings season for Q2 has just started and things could get more interesting in the coming weeks. On the other hand, the coronavirus pandemic appears to be here to stay as it continues to take a toll on the market. 

Earlier in the week, the US durable goods orders ex-transportation for June missed the expectation of 3.5% with 3.3%. The durable goods orders ex-defense also came short of 18.6% with 9.2%. On the other hand, general durable goods orders beat 7.2% with 7.3% while non-defense capital goods orders ex-aircraft outperformed 2.3% with 3.3%.

On Thursday, the preliminary US GDP for Q2 missed 1.1% with -2.1% while annualized GDP slightly outperformed -34.1% with -32.9%. The US Federal Reserve decided to keep the base interest rate unchanged at 0.25% on Wednesday. This was followed by some improvement in the initial jobless claims which beat 1.45M with 1.434M. Continuing claims missed 16.2M with 17.018M.

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

Technically, the US Dollar Index 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 DXY has since crossed to oversold levels of the 14-hour RSI.

The bulls will be targeting short-term rebound profits at around 93.50 or higher at 94.00. On the other hand, the bears will look to extend short-tern declines towards 92.50 or lower to 92.00.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the US Dollar Index appears to be trading within a sharply descending channel. This indicates a long-term bearish bias in the market sentiment. The USDX is oversold in the 14-day RSI and has now dropped to a new 26-month low.

The bulls will be targeting long-term rebound profits at around 95.02 or higher at 97.33. On the other hand, the bears will look to retain long-term control by targeting profits at around 91.11 or lower at 88.51.

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