US Dollar Index Pulls Back Off 2-Week Highs to Trim Weekly Gains

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The US Dollar Index (DXY) on Friday pulled back off the current 2-week highs of about 93.90 to trade at around 93.71. This came following the latest round of US retails sales data for September. 

The USDX remains several levels above the 100-hour and the 200-hour SMA lines which provide crucial support zones. It continues to trade centrally in the 14-hour RSI despite today’s pullback.

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 Q3 earnings season has just kicked off with the financial and industrial sectors leading the early releases. However, we won’t hit the climax until November time. Nonetheless, this could still excite the market a bit thereby driving activity up. Normally increased trading activity results in a better DXY performance especially if the activity is positive.

Based on the latest US economic data, investors could still retain a bullish outlook of the dollar index. On Friday, the US retail sales control group for September beat the expectation of 0.2% with a change of 1.4%. General retail sales also impressed with a (MoM) performance of 1.9% versus the expected change of 0.7% while retail sales ex-autos outshone 0.5% with 1.5% (MoM). The Michigan Consumer Sentiment Index for October also beat the expected reading of 80.5 with 81.2.

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

Technically, the USDX appears to be trading within a slightly descending channel in the 60-min chart. This indicates a slight short-term bearish bias in the market sentiment. The dollar index is now trading off the trendline resistance. This triggered Friday’s pullback.

The bears will be looking to ride the current pullback by targeting profits at around 93.52 or lower at 93.28. On the other hand, the bulls will look to pounce for profits at around 93.90 or higher at 94.11.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the DXY appears to be trading within a sharply descending channel. This indicates a strong long-term bearish bias in the market sentiment. The dollar index has recently bounced back to surge towards the trendline resistance.

The bulls will be looking to push the current rebound high towards 94.69 or higher at 95.61. On the other hand, the bears will target pullback profits at around 92.74 or lower at 91.85.

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