The US Dollar Index (DXY) moved sharply lower on Tuesday but has since stabilized, forming a hammer, a bullish candlestick formation, in Thursday’s trading. DXY is currently following through to the upside, trading at 99.95, a gain of 0.12% over Thursday’s close.
Further upside could take place over the near-term, as the Stochastic reached a fully oversold level and subsequently made a cross to the upside. Resistance at the mid-point of Tuesday’s long red candle, near the 99.93 area, is currently being tested. On a break above this level, the next area of resistance comes quickly into play at 100.00, followed by 100.50.
Overall, however, the broader bias is to the downside. On Tuesday, DXY took out the 61.8% retracement of the advance from the March low. Thus, the current rebound is expected to be temporary and followed by a complete retracement of the advance from the March bottom, which would result in a move back to the 98.86 level.
In economic news, Existing Home Sales will be released at 10:00 ET today.
Yesterday, it was reported that initial jobless claims increased 244,000 in the week ending April 15th from 234,000 previously and the data was slightly above consensus forecasts of an increase to 242,000. The four-week moving average, however, declined to 234,000 from 247,250 previously.