US Dollar Index (DX) Futures Technical Analysis – Strong Retail Sales, Homebuilders Data Driving Upside Momentum

September U.S. Dollar Index futures are trading sharply higher, driven by increased demand for risky assets. Positive news regarding the crisis between the United States and North Korea helped underpin the index earlier today, but a stronger-than-expected U.S. retail sales report helped launch the rally. Additional support is being provided by strong data from the National Association of Home Builders.

According to a North Korean state media report on Tuesday, leader Kim Jong Un has delayed a decision on firing missiles towards the U.S. Pacific territory of Guam. This encouraged dollar investors to downplay last week’s threat to attack Guam.

In other supportive news for the U.S. Dollar, U.S. retail sales recorded their biggest increase in seven months in July as consumers boosted purchases of motor vehicles as well as discretionary spending. The Commerce Department report showed retail sales jumped 0.6 percent last month, the largest gain since December 2016. This followed June’s upwardly revised 0.3 percent rise.

Homebuilder sentiment also rebounded in August after tumbling to an 8-month low in the prior month, according to an industry report released on Tuesday. The monthly confidence gauge from the National Association of Home Builders jumped four points to a reading of 68.

Technical Analysis

Right now, it’s all about the swing chart and the market clawing back some of its losses from early July to early August.

The main trend turned up earlier today when buyers took out the last swing top at 93.785. This puts the index on course to challenge the next main top at 94.115. The trend will change back to down on a trade through 92.830.

Support is a pair of retracement levels at 93.46 to 93.25.

Resistance is a series of retracement levels at 94.175 and 94.323. It then jumps to 94.60 and 94.78.

Forecast

With fresh fundamental news to back the rally, we’re looking for the upside momentum to continue into at least 94.175 to 94.32. The rally could stall at this point on profit-taking.