USD could be in for a correction to the downside.
This article is originally referred from Orbex Technical Analysis.
The U.S. dollar index managed to post a strong rally last week. Price action broke past the resistance level of 95.30 – 95.05 quite comfortably.
The gains came on a mix of both economic data and hawkish comments from policy makers in the United States.
Economic data over the week covered the key economic indicators for the month of September which also marks the end of the second quarter.
Investors assessed the data for the third quarter.
The ISM’s manufacturing PMI declined after hitting a 14-year high just the month before.
Meanwhile, the services sector surged to the highest level on the index since record keeping started in 2008.
The data cemented views that the U.S. economy was on track to maintain its economic momentum.
However, Friday’s payrolls painted a mixed picture.
But overall, data showed that the temporary blip in adding smaller jobs came due to the Hurricane Florence.
The Fed chair Jerome Powell also came out with hawkish comments on the U.S. economy adding to the USD’s gains.
From a technical outlook, we expect the gains in USD to be outstretched.
However, a break below the support level is needed to confirm the downside bias.
We continue to maintain the outlook that the USD could be in for a correction to the downside.
Original Source: Orbex Technical Analysis