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US Dollar Index (DX) Futures Technical Analysis – Dollar Fails to React to Positive U.S. New Home Sales Data

By:
James Hyerczyk
Updated: Jun 23, 2017, 22:20 UTC

September U.S. Dollar Index futures are trading lower as the trading session comes to a close even though data showed sales of U.S. new homes in May came

U.S. Dollar Down

September U.S. Dollar Index futures are trading lower as the trading session comes to a close even though data showed sales of U.S. new homes in May came in stronger than expected, reducing worries about a slowdown in the domestic housing market.

According to the U.S. Commerce Department, new home sales increased 2.9 percent to a seasonally adjusted rate of 610,000 units last month. April’s sales pace was also revised higher to 593,000 units from 569,000 units.

Traders were looking for a rise of 5.4 percent or 597,000 units last month. Sales were also up 8.9 percent on a year-on-year basis in May.

U.S. Flash Manufacturing PMI came in at 52.1, lower than the 53.1 estimate. U.S. Services PMI came in at 53.0, under its 53.9 forecast.

U.S. Dollar investors may have been reacting to U.S. Treasury yields. They traded mixed on Friday with the yield on the benchmark 10-year Treasury Note trading flat at 2.15 percent. The 30-year Treasury Bond was down slightly at 2.712 percent.

The dollar was also pressured by comments from St. Louis Fed President James Bullard. He said on Friday there is still no need to further raise short-term rates right now.

U.S. Dollar Index
Daily September U.S. Dollar Index

The index was under pressure all session after finding resistance from the opening at 97.33. This created the downside momentum needed to challenge the next uptrending angle at 96.90.

Given the short-term range of 96.02 to 97.515, we could see a test of its retracement zone at 96.77 to 96.59 on the close.

The trend is up according to the daily swing chart, but momentum is beginning to shift to the downside. The attempted breakout earlier in the week was not very impressive. This suggests that buy stops rather than aggressive buying has been driving the market higher.

We’re going to find out how strong the dollar is early next week by how the market reacts to a test of the retracement zone at 96.77 to 96.59.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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