The DXY is off its daily lows, but downward pressure persists after declining retail sales data, as well as a higher-than-expected number of initial jobless claims applications, hit the US Dollar today. The US Dollar was marginally lower against the majors, with the Euro hitting 4-month highs against the USD ahead of the EU Conference to discuss the Economic Recovery Fund.
1.3million people filed for unemployment benefits, which shows that the gradual reduction in the number of initial jobless filings has stalled with the numbers still in 7-digits. Furthermore, the retail sales figures for June 2020 were about a third of what they were the previous month, showing that the recovery momentum in the retail sector has been lost, even if temporarily. The retail industry was one of the worst hits during the initial peak of the US coronavirus outbreak in April and has become a gauge of economic affectation by the pandemic in the US.
The USD Index is trading 0.11% lower on the day at 95.93 as at the time of writing.
Technical Outlook for DXY
The DXY continues on its journey towards the 95.71 support, as it seeks to complete the price objective from the breakdown of the bearish flag pattern on the daily chart. 95.71 should achieve this price objective. However, the US Dollar’s behaviour in the market will dictate whether the price will continue to slide or whether it will bounce.
A decline below 95.71 opens the door towards the 2019 low at 94.62. Further descent towards 93.80 and 93.12 (2018 lows) could make these areas relevant to the price situation as possible support targets.
On the flip side, a bounce at 95.71 allows the DXY to recover to 96.07 and possibly 96.46. Further advance takes the asset towards 97.16 or possibly 97.71.