US Dollar Index Fails to Surge Above 94.00 Despite Positive CPI Data

The US Dollar Index on pulled back after rejecting a retest of 94.00 to trade at around 93.42 despite an impressive round of US CPI data. The dollar index pulled back after completing a XABCD double-bottom reversal pattern. It soon found support off the 100-hour SMA.

The USDX continues to trade centrally in the 14-hour RSI in the 60-min chart. It faces strong resistance around the 94.00 level. It could continue to trade below this level through Friday amid a lack of clear directional momentum.

The US Dollar Index Fundamentals Overview

From a fundamental perspective, the USDX is trading at the back of an extended period of uncertainty over whether the US government will inject another round of QE. News broke out on Wednesday that this might not happen. This might have contributed to the pullback in DXY. Nonetheless, the latest round of economic data showed promise after both the US producer price index and the consumer price index for July beat expectations.

On Tuesday, the US PPI for July outperformed the (YoY) expectation of -0.7% with -0.4%. The (MoM) equivalent beat 0.3% with 0.6%. On the other hand, PPI ex-food and energy beat the (MoM) and (YoY) expectations of 0.1% and 0.0% with 0.5% and 0.3%, respectively. On Wednesday, the US CPI ex-food and energy for July outperformed 0.2% (MoM) with 0.6%. The (YoY) equivalent also beat 1.1% with 1.6%. General CPI beat the (YoY) expectation of 0.8% with 1.0% while the (MoM) change of 0.6% was better than the estimated change of 0.3%.

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

Technically, the USDX appears to be finding strong resistance around the 94.00 level. It also appears to have found support off the 100-hour SMA in the 60-min chart. This could restrict the dollar Index’s movement for the next few days.

The bulls will be targeting short-term profits at around 93.71 or higher at 94.00. On the other hand, the bears will look to extend the current pullback towards 93.15 or lower to 92.88.

The US Dollar Index Technical Analysis (the Daily Chart)

In the daily chart, the bears appear to be firmly in control of the US dollar index. The USD continues to trade within a sharply falling channel that extends back to April this year. It has recently bounced off the trendline support to escape from oversold levels of the 14-day RSI.

The bulls will be looking to capitalize on this rebound by targeting long-term profits at around 94.48 or higher at 95.45. On the other hand, the bears will look to pounce on profits at around 92.52 or lower at 91.52.