US Dollar (DXY) news and analysis
- Positive manufacturing data lifts the looted dollar
- Technical considerations for DXY: A bounce at support provides support for a pullback development
- The analysis in this article is used chart patterns and key Support and resistance levels. For more information visit our comprehensive website Educational library
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Positive manufacturing data lifts the falling dollar
In a somewhat unexpected turn, the dollar received a welcome boost after much better-than-expected data from the Empire State Manufacturing Index in New York. The index, after recording four consecutive prints below zero (indicating a contraction), rose to 10.8 when it was only expected to come in at -18.
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USD Basket (DXY) – Technical considerations
Manufacturing data as a whole has held back the more important services industry, but a recent rebound in New York’s Empire State variance has sent the greenback higher for the day so far, extending a decline that gained traction near the end of last week.
5 minute dollar basket chart
Source: TradingView, prepared by Richard Snow
The dollar trades roughly in line with the 10-year Treasury yield and the recent move higher coincides with another hike in US interest rates. DXY remains inside the descending channel as the broader downtrend continues. However, if the reversal is in full swing, the dollar bulls will be on the lookout for a breach of an ascending channel and attempt to trade towards 103.00.
Continuation of the downtrend leads to lower levels like 101.30 and the psychologically important level 100.
Daily chart of the US Dollar (DXY) basket with the 10-year Treasury yield
Source: TradingView, prepared by Richard Snow
There is something to be said for a potential dollar decline like last week’s US inflation data He proved that although headline inflation fell like a stone, core inflation (headline inflation excluding more volatile items such as fuel and food) rose slightly. This has now led the markets to revise their interest rate expectations upwards, which supports at least a short dollar decline. The weekly chart below indicates that a short term reversal may be in the works as prices failed to sell off beyond 100.85 and are now trading higher.
DXY Weekly Chart
Source: TradingView, prepared by Richard Snow
– Posted by Richard Snow for DailyFX.com
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