The US dollar is about to end Tuesday with mixed results across the board. The US Dollar index, which gauges the US dollar against its main competitors, opened the day around 95.20, dropped to 95.07 and then bounced reaching 95.54, at the time when EUR/USD was trading under 1.1200.
During the second half of the American session, it pulled back and it was about to end the day around 95.25, up marginally from yesterday’s closing price. The DXY index suffered no impact from the US Presidential debate, which had a lasting impact on emerging market currencies, among them, the Mexican peso that jumped rising more than 2%.
On Wednesday, in the US the August Durable Goods Order report will be release and Janet Yellen will present testimony before the Committee on Financial Services, of the US House of Representatives.
Technical outlook
Marc Chandler from Brown Brother Harriman points out that the US dollar index has been moving above a bullish trendline since early May. “It appears set to be re-tested in the coming days. It comes in near 94.80 today and rises a little more than two ticks a day to finish the week near 94.90.”
He affirms that technical indicators like RSI, MACDs, and Slow Stochastics suggest there are reasonable chances that the trend is violated. If that happens one possibility it that the violation targets 94.45 (September 8 low) and below is the congestion from the second half of August in the 94.05-94.25 area.
Another alternative, explains Chandler, is a scenario of deeper losses if the DXY rally from mid-August is considered a correction for the down leg from late-July. Under this scenario the risk is a return to the 92.00-93.00 lows from the second quarter.
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