Technical Bias: Bearish
Key Takeaways
US dollar index is likely forming a short-term top pattern which might increase bearish pressure on the greenback moving ahead.
US building permits and housing starts data are the main risk events lined up today.
US dollar index support seen at 87.20 and resistance ahead at 87.80.
US dollar is trading in a negative territory this week as there is a lot of pressure mounting on bulls to maintain the upside moving ahead.
Technical Analysis
Recent price action in the US dollar suggests that a short-term top is in the making. This view gets more weightage when we analyze the US dollar index 4 hour chart. There is a double top pattern forming, which is likely to ignite more downside in the near term. The US dollar index also closed below the 50 simple moving average (SMA) – 4H, which can be considered one more bearish development. There is a bullish trend line forming which might act as a support for some time, but overall it remains at risk of a break lower. One more important support can be seen just below the mentioned trend line as the 100 SMA (4H) is sitting just around the 87.15 level. Only a break and close below the mentioned level could ignite more losses in the short term.
On the upside, the last high which is also a double top resistance could act as a hurdle. A break above the 88.29 high would negate the double top pattern and might call for more gains moving ahead.
US Building Permits and Housing Starts
There are a couple of releases lined up in the US during the NY session, including the US Building Permits released by the US Census Bureau, at the Department of Commerce. The forecast is of a minor gain from the last reading of 1.018M to 1.040M. If the outcome misses the mark, then we might witness Intraday selling sentiment in the US dollar.
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