The US dollar index (DXY) is up by about 25 basis points today as investors continue reflecting on the upbeat US retail sales numbers. At the same time, major averages in the US like the Dow Jones, S&P 500, and Nasdaq 100 are up by about 0.50%, extending the excellent gains made yesterday.
US dollar gains ahead of housing data
The US dollar index (DXY) is up ahead of the housing starts and building permits data that will be released at 13:30 GMT. Analysts expect that the numbers will project a positive picture for the US economy. For example, those polled by Reuters expect that housing starts increased to 1.09 million in May. The starts increased by 891,000 in April.
Meanwhile, analysts expect that building permits increased from April’s 1.06 million to more than 1.22 million. Highly upbeat numbers will send a signal that the US economy is probably going through the shortest recovery on record.
They will also show that the Federal Reserve is probably underestimating the ongoing growth. This is after other numbers showed that the US is in a better place than what analysts were expecting. For example, the nonfarm payrolls numbers showed that the economy created more than 2.5 million jobs in May. Similarly, retail sales numbers rose by almost 17% in May, which was almost double what analysts were expecting.
Looking at the US dollar index constituents, we see that the USD has gained against the Swiss franc and the euro. It is up slightly against the Japanese yen, sterling, Swedish krone, and Canadian dollar.
The US dollar index is trading at 97.12, which is above 95.71, the lowest point this month. It is also below 97.40, the highest point since Friday. Also, the price is between the 23.6% and 38.2% Fibonacci retracement level and below the 50-day and 100-day exponential moving averages. On the daily chart, the price has formed a bearish pennant pattern, which means that it could resume declining. If it does, bears will be targeting the previous support 95.76.
On the other hand, a move above the previous resistance of 97.46 will invalidate this trend. This price is the highest it has been since June 12.