The US dollar index on Friday extended its mid-week declines to 108.000, falling below the 100-hour moving average line in the 60-min chart. The dollar currency index now seems to be trading within a descending channel formation after hitting new multi-year highs.
The USDX had spiked to trade above 109.00 before Wednesday’s US inflation data triggered the pullback. However, the DXY still seems to have some room left before reaching the oversold conditions of the 14-hour RSI.
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. On Friday, the US retail sales control group for June beat the expectation of 0.3% with a change of 0.8%. General retail sales for the period also outshone the expected (MoM) change of 0.8% with a change of 1%, while retail sales ex-autos outperformed 0.6% with 1% (MoM). Elsewhere, the preliminary Michigan Consumer Sentiment Index for July beat the expected reading of 49.9 with 51.1.
On Thursday, the US initial jobless claims for last week missed the expected claim count of 235k with a higher tally of 244k. On the other hand, the continuing claims for the preceding week beat the expectation of 1.383 million with a lower claim count of 1.331 million. Earlier in the week, the US consumer price index for June beat the (YoY) expectation of 8.8% with 9.1%, while the (MoM) equivalent beat 1.1% with 1.3%. The CPI ex-food and energy also beat on both the (MoM) and (YoY) basis.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the USDX seems to be trading within a descending channel formation in the 60-min chart. This indicates a significant short-term bearish bias in the market sentiment.
Therefore, the bears will be looking to pounce on extended declines at about 107.851 or lower at 107.663. On the other hand, the bulls will look to pounce for profits at about 108.190, or higher at 108.386.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the USDX seems to be trading within a sharply ascending channel formation. This indicates a significant long-term bullish bias in the market sentiment.
Therefore, the bulls will be looking to retain control of the DXY by targeting profits at about 108.674, or higher at 109.297. On the other hand, the bears will target potential pullbacks at about 107.511, or lower at 106.805.