97.000 Back In Play For USD Index

It has been a brutal week for the USD Index, with a broad-based sell-off sending rates into corrective territory. Fundamentals have driven the action, led by an E.U./U.K. Brexit breakthrough and furious rallies in the GBP/USD and EUR/USD. In addition, another group of sub-par U.S. metrics suggests that an economic slowdown is now, not later. Add it all up and the Greenback is down across the majors.

Economic Data Disappoints

During this morning’s U.S. pre-market hours, a collection of economic reports were released to the public. There wasn’t much to cheer about for the USD Index, as the vast majority of the numbers missed projections. Here is a look at a few of the highlights:

Event                                                                                Actual        Projected       Previous

Building Permits Change (Sept.)                                    -2.7%           -26.0%             8.2%

Continuing Jobless Claims (Oct. 4)                               1.679M         1.682M          1.689M

Housing Starts Change (Sept.)                                        -9.4%             -8.6%             15.1%

Philadelphia FED Manufacturing Survey (Oct.)              5.6                  8.0                12.0

While the real estate and employment sectors are showing signs of fatigue, the real headliner of this group is the Philadelphia FED Survey. The number came in at a dismal 5.6, off 6.4 points from September. Given the recent stimulus via back-to-back FED rate cuts, this is an extremely negative signal facing the American economy.

As a result, the USD Index is plunging. Lagging economic data and a correction vs the EUR, CHF, and GBP have brought the 97.000 handle back into view.

USD Index Back On The Doorstep Of 97.000

As illustrated by the USD Index, it has been a rough week for the Greenback. Growing FED rate-cut mania is taking over sentiment and driving rates south.

There is one support level worth noting for the near future in this market:

• Support(1): Psyche Level, 97.000

Overview: The last time the USD Index traded 97.000 was on August 29. Now, it appears that rates are destined for a return to this level. In the event this market continues to fall, a long trade may set up from the vicinity of 97.000. Be sure to check in before the weekend break for details on how to capitalize upon the price action.