The US dollar index on Friday pulled back off the session highs of about 104.79 to trade at about 104.47 after the latest US data. The DXY appears to have completed a downward breakout from an ascending channel formation in the 60-minute chart.
The dollar currency index has now descended to trade a few levels below the 100-hour moving average line. As a result, the USDX avoided rallying into the overbought levels of the 24-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 market. On Thursday, US building permits for April missed the expectation of 1.48 million with a tally of 1.44 million. Housing starts for the period also fell short of 1.42 million with 1.36 million, while industrial production missed the expected (MoM) change of 0.1% with a change of 0%.
On the other hand, the initial jobless claims for the week ending May 10 failed to match the forecasted claim count of 220k with a slightly higher tally of 222k, while the Philadelphia Fed Manufacturing Survey for May missed the forecast of 8 with a reading of 4.5.
Earlier in the week, US retail sales for April missed the expected (MoM) change of 0.4% with a change of 0%, while the retail sales ex-autos was in line with the estimate of 0.2% (MoM). The consumer price index for April missed the expected (MoM) change of 0.4 with a change of 0.3%. The (YoY) equivalent was in line with the estimate of 3.4%.
The US Dollar Index Technical Analysis – the 60-min Chart
Technically, the US dollar index appears to have recently completed a downward breakout from an ascending channel formation. The 14-hour RSI has also pulled back to avoid rallying into overbought conditions.
Therefore the bears will be targeting extended declines at about 104.30 or lower at 104.07. On the other hand, the bulls will look to pounce on rebounds at about 104.62 or higher at 104.79.
The US Dollar Index Technical Analysis – the Daily Chart
In the daily chart, the US dollar index appears to be trading within a descending channel formation. The 14-day RSI also seems to support a bearish bias as it edges closer to oversold conditions.
Therefore, the bears will be looking to ride the current run of declines toward 103.88 or lower to 103.16. On the other hand, the bulls will look to pounce on rebounds at about 105.03 or higher at 105.76.