Dollar retreats but remains above key levels

The US Dollar index, which gauges the greenback against its main competitors, paused its upside today. It moved sideways most of the day. After ECB press conference it peaked at 97.22 and then pulled back toward 97.00. It was trading at 96.95, down 0.23% for the day.

Greenback declined despited better-than-expected US data released today that included initial jobless claims and existing home sales. The negative side was the decline in the Philly Fed index from 4.7 to -2.9; market consensus pointed toward a rise to 5.0.

Modest correction

The DXY retreaded today after an important rally that brought the index toward the highest level in four months. Despite the decline it still remains above key technical levels. Price pulled back but found support above 96.70, where June highs lie. After reaching the lows it bounced back toward toward 97.00.

The index gave signals of exhaustion yesterday after being unable to rally toward 97.50 and it finished far from the highs. Today it attempted to move toward the highs but turned to the downside and started a correction.

The correction so far has been limited and the DXY held above key technical levels, showing that the bullish momentum remains strong. A decline below 96.70 would remove strength to the USD and probably could lead to a test of the 20-day, moving average located at 96.25.