DXY posts bearish engulfing candle after bad manufacturing survey

FXstreet.com (Barcelona) - The US Dollar Index (DXY) traded higher following most of the US data releases Thursday, but reacted very bearishly to a big miss on the Philly Fed Manufacturing Survey at 14:00 GMT.

DXY was good, good, OK , sketchy and then outright bad after respective data points were released.

Here’s a summary of the US data flow and the reaction in the DXY Thursday:

• 12:30 GNT: Monthly CPI data – in-line with expectations; no reaction;
• 12:30 GMT: Weekly Jobless Claims – fewer jobless claims filed than expected; DXY jumped on the news;
• 12:30 GMT: New York Empire State Manufacturing – weaker-than-expected; data ignored.
• 13:00 GMT: TIC Flow – way lower than expected; some initial selling started in DXY;
• 13:15 GMT: Industrial Production / Capacity Utilization - each came in lighter / worse than expected; DXY rebounded slightly, but the bounce appeared to be just a correction and the selling picked back up quickly; and,
• At 14:00 GMT, the US Philadelphia Fed Manufacturing Survey indicated the there was a surprising and significant slowdown in manufacturing in New York.

Technical outlook for the DXY

Technicians still say it is possible to see a move in the DXY down to the 80.51 – 80.66 area despite the recent strength. Today’s bearish action lends this idea more credibility. Once the anticipated low is established, however, they are calling for a sharp move to the upside with an ultimate target of at least 85.00. Shorter-term resistance for DXY comes in at the peak from the last few sessions at 81.88 and is followed by the more important resistance formed by the 7/24 peak at 82.42.