DXY Dollar Index Price Extends Sideways Move, Impacted by Key Data

• The Dollar Index has dropped, but this could still be only a temporary one.
• Making a valid breakout through the immediate obstacles could signal an upside continuation.
• The Double Top reversal pattern will be activated only after making a new lower low.

The DXY Dollar Index price has found support and now is struggling to rebound. A temporary bounce back was somehow expected after the most recent sell-off. However, the pressure is still high, so further drop could signal that the USD could depreciate further versus its rivals in the short term.

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DXY moves somehow sideways in the short term. However, a larger drop is far from being confirmed, so we cannot exclude a potential growth towards the weekly pivot point (92.727).

The index needs a helping hand from the US economy tomorrow to stay higher and increase. As a result, the Retail Sales are expected to drop by 0.2% versus 0.6% growth in June, while the Core Retail Sales indicator could increase by 0.2% in July compared to 1.3% in June.
Industrial Production is expected to increase by 0.5% versus 0.4% in the previous reporting period, while the Capacity Utilization Rate could increase from 75.4% to 75.7%.

DXY Dollar Index price technical analysis: Support to safeguard further losses

The Dollar Index has found support on the descending pitchfork’s upper median line (UML). However, the weekly pivot point (92.727) and the 150% Fibonacci line are immediate upside obstacles.

Technically, only a valid breakout through these levels could announce an important growth and an upside continuation. The 23.6% (92.32) and the S1 (92.26) are seen as support levels. DXY has printed something like a Double Top pattern.

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Still, the reversal formation is far from being confirmed. Only a new lower low, a valid breakdown below 38.2% retracement level, could activate this pattern. So, it’s premature to talk about this scenario right now and as long as it stays above the upper median line (UML).

A temporary consolidation above 92.47 Friday’s low followed by a breakout above the immediate resistance levels could invalidate a deeper drop.

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