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US Dollar Index: Choppy Trading Post-CPI Ends With Small Gains Around 92.00

The USD Index (DXY) is down this Wednesday after US Core CPI rose to 0.1% from the previous month’s figure. This was however less than the market expectation. The headline Consumer Price Index (CPI) came in at the expected figure of 0.4%, which was higher than the previous month’s figure. 

The CPI results are disappointing and have forced down the 10-year bond yields on the day. This has also led to an initial weakening of the greenback on the day. However, after an initial downward response to the news, the USD Index is trading slightly higher, gaining 0.07%.

Technical Outlook for USD Index

Today’s initial decline has met support at 91.906, following the bearish engulfing candlestick pattern that truncated the attempted break at the resistance posed by the channel’s return line and the 92.500 price level. As long as this support level holds, the price retains the ability to retest the current resistance. A break of the channel’s upper border has to be followed by a break of the 92.50 price resistance. This allows bulls to target 93.173, with the 6/20 November 2020 highs at 92.803 forming an intervening barrier.

On the other hand, a breakdown of the 91.50 support allows for a continuation of the pullback move from the failed retest of the channel’s return line, targeting the 91.261 and 90.965 support levels. Further decline that aims for the channel’s trendline has to take out the latter price level. The channel’s return line could intersect the 90.503 support, with a breakdown bringing 90.228 and 89.741 back into the picture. 

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USD Index; Daily Chart

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