The dollar index was lower by 0.35% after Retail Sales from the U.S. economy missed expectations. Traders were expecting retail sales to come in at 0.5% after a strong 1.9% in the previous month, but the actual number was a gain of 0.3%.
The number was a sixth-consecutive monthly gain for the U.S. economy but it doesn’t highlight a resilient consumer as spending is curbed due to the coronavirus, while the Christmas spending period is around the corner. The failure of the recent second stimulus package talks have hit the potential for consumer spending into year-end and probably early-2021.
Tomorrow sees the release of the latest inflation figures from the Eurozone with the market expecting a print of 0.2%. The Euro has the highest weighting in the dollar index and this will ensure that the index could see volatility if the inflation print differed. European Central Bank members have previously been critical of a higher euro due to its effect on inflation and this could be a theme that comes into play later in the year as the single currency tests the 1.1900 level again. The pair saw a high of 1.2000 this year and ECB policymakers may take action if it continues to rise.
Dollar Index Technical Outlook
The dollar index bounced from the 92.50 level but the strength was short-lived with the pair failing at 93.00. The DXY is now looking to retest the lose at 92.20 and a test of the September 1st low at 92.00 is possible. Traders could short this for a potential break of 92.00 with a stop above today’s high. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.