The US dollar index (DXY) is under pressure and is trading near the lowest levels since March. The index, which measures the dollar’s performance against peer currencies, is trading at 95.21, slightly above the intraday low of 95.05.
US dollar reacts to China consulate closure
The US dollar index rose slightly as traders reacted to the latest cold-war tactics between the United States and China. In a statement, a Chinese official said that the country was ordered to close the consulate in Houston.
The reasons for the current provocations were not known. According to the New York Times, Chinese officials in the consulate burnt what appeared to be documents and denied Houston’s fire marshals offer to put the fire off. In a response, China asked the US to rescind this decision and threatened to retaliate. This decision came a day after the US charged a group of Chinese for hacking companies doing research on coronavirus.
The latest round of tensions come at a time when Washington and Beijing are rising. China has been disappointed by the Trump administration’s decision to blame it for secrecy in early days of the virus. It has also been disappointed for US meddling into Xinjian and Hong Kong.
US dollar index falls as other currencies shine
The USD index is also falling as other currencies rise. For example, the euro jumped to an 18-month high as traders reacted to the EU recovery fund deal. Similarly, the Swedish krone has jumped to a 19-month high as the country’s recovery continues to accelerate.
The same is true with other currencies like the Swiss franc and sterling. At the same time, investors are selling dollars as the US prepares another round of stimulus.
USD index technical forecast
The US dollar index is trading at 95.21. On the daily chart, the index is below the 50-day and 100-day exponential moving averages. It is also in a deep downward trend as shown by the descending purple trend line. The RSI has also dropped to the lowest level since June 20. Therefore, the index is likely to continue falling as bears target the next support at 95.00.
On the flip side, a move above 95.73 will invalidate this trend. This price is along the lowest level on June 10.