The US Dollar index has been able to find the momentum to stage an upside movement as the stimulus talks continue to drag on. However, the US Dollar was able to benefit from positive manufacturing data out of the Philadelphia Federal Reserve bank. Philly Fed Manufacturing Index more than doubled from the previous figures, rising from 15.0 to 32.3. This blew the consensus of 14.4 out of the water, enabling the USD Index to gain 0.44% at the time of writing.
The US Dollar Index (DXY) is also benefiting from relative strength against its peers, especially the Australian Dollar, which has seen some severe weakness on dovish comments by the RBA Governor. The USD Index continues the choppy price action this week which has seen it alternate between losses and gains this week, against the backdrop of more uncertainty in the US political arena.
US lawmakers continue to haggle over additional coronavirus stimulus, with US House Speaker Nancy Pelosi demanding changes to the package proposed by US President Trump in a Tuesday letter. She is scheduled to speak with US Treasury Secretary Steve Mnuchin over the phone today as both parties aim to come to a consensus on the bill.
Rounding off the economic data for the week that could impact the USD Index include the retail sales data and industrial production + capacity utilization data on Friday. These are measures of consumer spending and industrial activity, and are a gauge as to the state of the US economy, even as the coronavirus case count continues to rise.
Technical Outlook for USD Index
The neckline of the rounding bottom pattern continues to provide reasonable support to price action. Lately, the pullback of Wednesday bounced off this support line and provided a fulcrum for today’s bullish move. Continuation of the advance allows the index to break above the 93.80 price level which has served as the resistance for today’s uptick. Such a break targets 94.62. Only a break of this area extends the recovery of the index towards 95.19 and possibly 95.72.
On the flip side, a rejection at 93.80 targets the 93.17 price level, which would come to fruition if the neckline fails. Extension of the decline would target 92.50 and possibly 91.91.
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USD Index Daily Chart
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