US Dollar Index Pulls Back Off Weekly Highs as Retails Disappoint

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The US Dollar Index (DXY) on Friday pulled back off the current weekly highs of about 90.92 to trade at 90.30 after weak US retail sales. The USDX continues to trade within a descending channel formation in the 60-min chart.

The dollar currency index has now dropped below both the 200-hour and the 100-hour SMA lines. It has also moved closer to the oversold levels of the 14-hour RSI. This could trigger a temporary rebound.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the US dollar currency index is trading at the back of a relatively busy period in the market. On Friday, the US retail sales control group for April missed the expectation of -0.2% with a change of -1.5%. General retail sales also came short of the (MoM) expectation of 1% with a change of 0%. On the other hand, retail sales ex-autos missed the expected (MoM) change of 0.7% with -0.8%. The preliminary Michigan consumer sentiment index for May missed 90.4 with 82.8. 

Earlier in the week, the initial jobless claims outperformed the expected claim count of 490k with 473k. The producer price index ex-food and energy for April also beat the expected (YoY) change of 3.7% with 4.1%. On the other hand, the US CPI ex-food and energy for the period outshone the (YoY) expectation of 2.3% with 3%. The (MoM) equivalent also beat 0.3% with 0.9%. The general CPI beat the (MoM) expectation of 0.2% with 0.8%.

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

Technically, the US dollar index appears to be trading within a descending channel formation in the 60-min chart. It has now moved closer to the oversold levels of the 14-hour RSI. this indicates a significant short-term bearish bias in the market sentiment.

The bulls will be targeting potential rebound profits at around 90.61 or higher at 90.92. On the other hand, the bears will look to extend the current pullback towards 90.00 or lower to 89.70.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the USDX appears to have recently pulled back to halt a recovery. It is now pinned to the 76.40% fib level on the way down. This indicates a strong bearish bias in the market sentiment. The DXY continues to trade very close to the oversold levels of the 14-day RSI.

The bulls will target potential rebound profits at around 50% and 23.60% fib levels at 91.34 and 92.38, respectively. On the other hand, the bears will target pullback at around the 100% fib level at 89.33 or lower at 88.43.

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