USD Index Up Slightly, But Upside Capped By Weak Consumer Confidence

According to data from the Conference Board, US Consumer Confidence for July 2020 weakened to 92.6, down from June’s 98.3 reading. This figure was also weaker than market expectations of 94.0, which shows how downbeat consumers were in July as the US economy continues to flounder in the face of a problematic domestic coronavirus situation.

A more in-depth look into the report indicates that there was an improvement in the Present Situation Index, but a decline in the Expectations Index, especially in states badly hit by the coronavirus such as Florida, Texas, Michigan and California. Job market appraisals were much more positive, with a rise from 20.5% to 21.3% in the number of consumers who said jobs were in abundance. The percentage of those who believed that jobs were more challenging to get, dropped from 23.3% to 20.0%.

Consumer Expectations Index dropped from 106.1 to 91.5 from 106.1. Consumers’ short-term outlook for the economy and jobs market has grown more pessimistic, which may impact consumer spending and overall recovery.

The USD Index has reacted negatively to the report, shedding dropping from its intraday high of 94.01 to its current level at 93.72. However, the US Dollar Index is still up by 0.08% on the day, as it tries to snap a 7-day losing streak. 

Technical Outlook for USD Index

The DXY continues to hover around the 93.80 price support, as the index seeks to decide on a close below the support (which confirms the break of that support), or closes above it, which could force a pullback to the upside. A close below the support opens the door towards 93.17, with 92.50 located not too far below. 

A close above the support level of 93.80 maintains the integrity of that price level and allows the DXY a chance at bouncing towards 94.62, with 95.03 and 95.19 forming further resistance targets up north. The market bias remains bearish ahead of tomorrow’s FOMC meeting.

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US Dollar Index Chart (daily)

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