US dollar index drops on Monday after hitting 7-month highs

The US dollar index is falling at the beginning of the week, retreating after trading above 98.00. The Greenback lost ground across the board at a modest pace on the back of weak economic data and despite the decline in equity prices in Europe and in Wall Street. 

Retreat from multi-month highs 

The DXY currently stands at 97.85, down 0.25% for the day, after posting important gains last week. So far the decline looks like a normal correction and the bullish tone still prevails. 

The upside has found an important resistance around the 98.00 handle. Today for the third session in a row it traded on top of the mentioned area, it peaked at 98.09, the strongest since March, but failed to hold and pulled back. It bottomed at 97.73. 

It was a day with modest price action moves across financial markets. Volatility could rise during the week taking into account the busy economic calendar ahead. 

Today’s economic data included US Industrial Production and Capacity Utilization for September that disappointed expectations, by rising only 0.1%. Previously, the NY Empire State index showed a decline to -6.8. Tomorrow in the US will be the turn of the CPI index (expect to show a 0.3% gain for September). Before, in the UK, also inflation data will be released. 

US Dollar relevant levels

To the upside, resistance levels could be seen at 98.05/10 (weekly high), 98.59 (Mar 3 high) and 99.00 (psychological). On the downside, support could be seen at 97.70/75 (daily low), area around 97.45 (Oct 12 & 13 low) and 97.15/20 ( Oct 7 high) and 97.00.


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