The US Dollar Index (DXY) was little changed near 100.70 on Friday after giving back early gains, as firmer housing starts and improved sentiment were offset by softer permits and subdued factory output. Housing starts rose to an annualised 1.43 million in June, above the 1.31 million consensus and up from 1.20 million, while single-family building fell for a third straight month. By contrast, building permits slipped to 1.37 million versus a 1.40 million forecast and 1.41 million previously. Industrial production edged up 0.1% month-on-month, undershooting a 0.2% estimate and matching May, with manufacturing flat as mining and utilities both increased 0.4%.
The University of Michigan’s preliminary consumer sentiment index climbed to 54.4 in July from 49.5, beating a 51.0 forecast, and the expectations gauge rose to 54.0 from 50.7. One-year inflation expectations eased to 4.2% from 4.6%, while the five-year measure held at 3.3%. On the four-hour chart, DXY was at 100.74 below its 100-period SMA of 101.03, with the 20-period SMA at 100.73 and RSI at 47.58; resistance sits at 100.80 and 100.86, while support is seen at 100.69 and 100.65.
Range-Bound Outlook And Trading Strategies
With the US Dollar Index currently hovering around 100.70, we believe derivative traders should prepare for a range-bound market in the coming weeks. The mixed economic signals, such as strong housing starts offset by weak building permits, suggest that a breakout in either direction is unlikely right now. We recommend utilizing neutral option strategies, such as iron condors, to capitalize on this low-volatility environment.
Inflation Trends And Technical Levels
Recent inflation data supports this cautious outlook, with the core Consumer Price Index stabilizing around 2.6% year-over-year as of July 2026. Furthermore, with the federal funds rate expected to hold steady or see only gradual adjustments, the yield advantage of the Greenback is slowly grinding lower. We suggest watching these interest rate differentials closely, as they will likely prevent any aggressive upside for the dollar.
From a technical perspective, we see immediate resistance at the 100-period Simple Moving Average of 101.03, while key support rests near 100.65. Traders should consider buying short-term put options on the DXY if it tests the 101.00 level, anticipating a rejection back into the current range. Alternatively, a clean break below 100.65 would be our signal to build larger short positions using put spreads to hedge against a deeper slide.
