DXY: US dollar index pressured even after strong retail sales

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Apr 15, 2021
  • The US dollar index is still under pressure after the strong US retail sales data.
  • The headline sales rose by 9.8% in March because of the stimulus.
  • Analysts believe that the sales will moderate as the impact of the stimulus fade.

The US dollar index (DXY) price was in a tight range after the US published relatively strong retail sales numbers and as bond yields fell. It is trading at $91.68, which is slightly above this week’s low of $91.45.

US retail sales data

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In March, the Joe Biden administration signed a stimulus package worth $1.9 trillion. This package included a $1,400 stimulus check to most American citizens. As a result, the funds led to a major jump in retail sales, according to the latest data by the Commerce Department.

The data revealed that the headline retail sales rose by 9.8% in March after sleeping by 2.7% in February. Core sales that exclude the volatile food and energy prices also rose by 8.4% after sliding by 2.7% in February. Retail control rose by 6.9% after slumping by 3.5% a month earlier. These numbers were better than estimates.

This bounce followed a similar route to what happened in January when the government passed the $900 billion stimulus package. In that month, sales rose by 5% after sliding by 1% in December.

These numbers came two days after the US published the strong consumer inflation numbers. Therefore, as they did on Tuesday, analysts believe that the current rally in retail sales will start fading as the impacts of the stimulus start fading.

The US dollar index also reacted to the latest initial jobless claims numbers. According to the Labour Department, the total initial jobless claims declined to 576k after rising by 744k a week before. The continuing jobless claims rose from 3.727 million to 3.7 million. 

The DXY is also wavering after the latest Philadelphia and New York Fed manufacturing index data. In New York, the manufacturing index rose from 17.40 in March to 26.3 this month. Similarly, in Philadelphia, the index rose to 50.2 in April. This happened as manufacturers remained optimistic about the US economy.

US dollar index technical outlook

US dollar index chart

On the four-hour chart, we see that the US dollar index has been falling recently. This week, it moved to a low of $91.55, which is along the 50% Fibonacci retracement level. It remains below the 25-day moving average while oscillators like the MACD and Stochastic have continued dropping, Therefore, this downward trend will continue so long as the price is below the two moving averages. You can trade the dollar index in one of these popular forex brokers.

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