US Dollar Index holds as mixed US data limits upside

• DXY holds near 100.70 after giving back its initial gains as mixed US data limits momentum.
• Housing Starts and Consumer Sentiment exceeded expectations, while Building Permits and Industrial Production missed consensus.
• Fed’s Hammack warned that inflation remains broad-based and persistently high, offering limited support to the Greenback.

The US Dollar Index (DXY) trades nearly unchanged around 100.70 on Friday after surrendering part of its initial advance. The Greenback received temporary support from stronger US housing starts and consumer confidence, but weaker building permits and subdued industrial production prevented a sustained rise.

US Housing Starts climbed to an annualized 1.43 million in June, beating expectations of 1.31 million and rising from 1.20 million previously. However, the headline increase was largely driven by multifamily construction, while single-family homebuilding declined for a third consecutive month. Building Permits fell to 1.37 million, below the 1.40 million forecast and the previous 1.41 million.

US Industrial Production increased only 0.1% MoM, missing expectations for a 0.2% gain and matching May’s increase. Manufacturing output remained unchanged, although mining and utilities production both advanced 0.4%.

Meanwhile, the preliminary University of Michigan Consumer Sentiment Index improved to 54.4 in July from 49.5, exceeding the market forecast of 51.0. The Consumer Expectations Index also rose to 54.0 from 50.7. One-year inflation expectations eased to 4.2% from 4.6%, while the five-year measure remained unchanged at 3.3%, limiting expectations of an immediate Federal Reserve (Fed) rate increase.

Cleveland Federal Reserve (Fed) President Beth Hammack maintained a cautious tone, saying businesses believe action is needed to curb inflation and that price pressure remains broad-based. She cited energy costs, supply chain disruptions, insurance expenses, and the AI data center buildup, while acknowledging solid growth and stable consumer spending.

Short-term technical analysis:

On the 4-hour chart, Dollar Index Spot trades at 100.74, retaining a mildly bearish bias as it stays below the 100-period Simple Moving Average (SMA) at 101.03. The index is holding just above the 20-period SMA at 100.73, which offers immediate support, while the Relative Strength Index (RSI) at 47.58 hints at a neutral-to-soft momentum backdrop rather than a decisive trend.

On the topside, initial resistance appears at 100.80, followed by a nearby cap at 100.86, before the more significant barrier at the 100-period SMA at 101.03. On the downside, support is clustered around the 20-period SMA at 100.73, ahead of horizontal floors at 100.69 and 100.65, where a break would likely expose the index to a deeper corrective slide.

(The technical analysis of this story was written with the help of an AI tool. Know more.)