The US Dollar Index has been able to reverse yesterday’s losses and is trading higher after a stellar durable goods orders report. Data from the Census Bureau indicates that the Durable Goods Orders for July came in at 11.2%, which trumped market expectations of 4.4% and also exceeded the previous month’s upward revision of 7.6%. Core durable goods landed at 2.4%, which beat market expectations of 1.9% but lagged behind last month’s upward revision of 3.6%.
Strong demand for automobiles drove the increase in the headline number, jumping 22% as discount car deals and lower cost of finance in the low-interest-rate environment drove buyers to the car shops. Data for orders of aircraft and plane components were not provided. However, the core component of the report (Durable Goods ex. autos) floundered, showing slow growth that meant it could not exceed that of the previous month.
The US Dollar picked up some momentum from the Durable Goods Orders report, allowing the USD Index to post a gain of 0.29% on the day. The DXY currently trades at 93.27.
Technical Outlook for DXY
The pair’s rise from the lower channel border following the divergence of price from the RSI. The candle is now testing the 93.17 resistance as well as the channel’s return line. Breakout confirmation must be sought and can be fulfilled by two successive closing penetrations above these resistance levels. This setup would then open the door for the price to aim for the 93.80 resistance target, with 94.62 and 95.19 constituting new upside targets.