US Dollar (DXY) Index News: Weaker on Profit-Taking Near November Top

U.S. Dollar Holds Firm Amid Housing Data Review

The U.S. Dollar Index is lower after giving back earlier gains. Shortly after the opening the greenback moved higher against its peers, driven by safe-haven demand amid geopolitical tensions and potential delays in Fed rate cuts. However, longs began to book profits as the index neared resistance levels from October and November. Traders were also disappointed by weak U.S. housing reports.

At 13:42 GMT, the U.S. Dollar Index is trading 106.133, down 0.049 or -0.05%.

Building Permits and Construction Miss Estimates

March data revealed significant misses in both housing starts and permits. Housing starts dropped 14.7% from February to 1.32 million, below the estimated 1.48 million. Permits declined 4.3% monthly to 1.46 million, falling short of the 1.51 million projection. Completed housing units also decreased by 13.5% to 1.47 million.

Modest Rise in Industrial Production

Industrial production increased by 0.4% in March, in line with forecasts, but showed a 1.8% decline for the first quarter of 2024. Capacity utilization slightly missed estimates at 78.4%, below its long-term average of 79.6%.

Strong Dollar Performance Against Pound and Euro

The U.S. Dollar surged to a five-month high against the pound and euro after better-than-expected U.S. retail sales data. This dampened expectations for immediate Fed rate cuts, with markets now pricing in a 41% chance of a cut in July.

Asia Focuses on Yen’s Weakness

In Asia, the yen hovers near a 34-year low against the dollar, prompting concerns over potential intervention from Japanese authorities. Hedge funds’ significant short positions on the yen raise worries of a substantial rally if the currency rebounds.

Short-Term Forecast for U.S. Dollar Index

In the short term, the U.S. Dollar Index is expected to maintain strength, supported by positive economic indicators and global uncertainties. Rising Treasury yields and better retail sales figures reduce expectations of immediate Fed rate cuts. Geopolitical tensions and potential delays in rate adjustments are likely to sustain demand for the dollar as a safe-haven asset, maintaining a bullish outlook.

Technical Analysis

The U.S. Dollar Index is putting in a mixed performance on Tuesday after an early session rally stalled. Technically, longs began to book profits as the market neared the November top at 107.113, reaching an intraday high of 106.437.

Minor support is 105.628. The major support is a price cluster formed by the 50-day moving average at 104.125 and the 200-day moving average at 103.872.