On Friday, the US dollar index pulled back from the session highs of about 100.03 to trade at about 99.10 after the latest U.S. data. The DXY trades within a descending channel formation in the 60-minute chart.
The US dollar currency index has now fallen to trade a few levels below the 100-hour moving average line. As a result, the USDX is on the verge of entering the oversold levels of the 14-hour RSI.
The US Dollar Index Fundamentals Overview
From a fundamental perspective, the US dollar index trades during a relatively busy period in the U.S. market. On Friday, the U.S. new home sales for April came in better than expected with 0.743 million versus a forecast of 0.692 million, up from 0.37 million in March. The new home sales change also increased to 10.9% up from 2.6%.
On Thursday, the preliminary S&P Global Manufacturing PMI for May exceeded the expectation of 50.2 with a reading of 52.3, up from 50.1 in April. The preliminary S&P Global Services PMI for the period also beat 50.8 with 52.3, up from 50.8, while the preliminary S&P Global Composite PMI improved to 52.1, up from 50.6. Elsewhere, the existing home sales for April edged slightly lower to 4 million from 4.02 million, missing the forecast of 4.1 million.
The initial jobless claims for the week ending May 16 came in better than expected with 227k versus a forecasted claim count of 230k, down from the previous week’s equivalent of 229k. The continuing claims for the week ending May 9 fell came in worse than expected with 1.903 million versus a forecast of 1.89 million, up from the preceding week’s claim count of 1.867 million.
The US Dollar Index Technical Analysis (the 60-min Chart)
Technically, the US dollar index trades within a descending channel formation in the 60-minute chart. The 14-hour RSI also supports a bearish bias as it moves closer to oversold conditions.
Therefore, the bears will look to stretch the current declines toward 98.18 or lower to 97.31. On the other hand, the bulls will look to pounce on rebounds at about 100.03 or higher at 100.86.
The US Dollar Index Technical Analysis (the Daily Chart)
In the daily chart, the USDX has completed a downward breakout from an ascending channel formation. The 14-day RSI has also pulled back to move towards oversold conditions.
Therefore, the bears will look to ride the current downward momentum towards 96.55 or lower to 93.95. On the other hand, the bulls will look to pounce on profits at about 101.97 or higher at 104.79.