The US Dollar Index (DXY) on Friday plunged to trade at around the 98.20/30 level the lowest point in 20 days following the latest round of US data. The SU dollar benchmark index has been on a downward trend since the start of the week, which comes off a failed attempt to recover from last week’s decline.
The USDX now looks set to extend losses well below the key level at 98.00 with a touch below 97.85 now a realistic target for the bears.
US Dollar Index Fundamentals Overview
From a fundamental perspective, the US Dollar Index is trading at the back of a relatively disappointing week in the US in terms of economic data. On Tuesday, the US Producer Price Index for September missed expectations of 0.1% with -0.3% (MoM) while the (YoY) figure came short of 1.8% expected with 1.4%.
PPI ex-Food and Energy also missed on both metrics with -0.3% and 2.0% respectively versus 0.2% and 2.3%. The NFIB’s Business Optimism Index also came short of expectations with 101.8 versus 104.1 points. JOLTS Job Openings for August came in at 7.051M versus an expectation of 7.191M.
And on Thursday, the US Continuing Jobless Claims for the week ending September 27 missed expectations of 1.653M with 1.684M. The CPI for September was also dismal coming in at 0.0% (MoM) versus an expectation of 0.1% while the (YoY) figure missed the expectation of 1.8% with 1.7%.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the USDX appears to have recently dropped to the oversold levels, which triggered a slight rebound late on Friday. However, the downward momentum is still there and this could cause further downside in the DXY.
Therefore, the bears will be targeting short-term profits at around 98.20, 98.01 or lower at 97.85. On the other hand, the bulls will be hoping for a continuation of Friday’s late rebound towards 98.46, 98.64 or higher at 98.80.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the US Dollar Index appears to be trading under slight bullish pressure in an ascending channel. The USDX is pegged closer to the top of the channel than it is to the bottom, which again illustrates a bullish bias in the market sentiment.
Therefore, the bulls will be targeting long-term profits at around 99.29 or higher at 99.71 while the bears will be hoping for a quick return to the bottom towards 97.91, 97.34 or lower at 96.65.
In summary, the US Dollar Index appears to be experiencing extreme bearish pressure in the short-term but in the long-term, the bulls retain control.