Dollar Index Echoing Bearish Tone Under 200-Day SMA

Down 0.4%, buyers largely took a backseat again last week, witnessing the US Dollar Index extend the prior week’s near-2.0% drop. Consequently, this has the index on the edge of recording its worst month of the year (MTD: -3.1%) and is on track to snap a three-month winning streak.

Room For Further Selling

The monthly timeframe’s one-sided bearish candle this month has well and truly thrown support at 99.67 back into the domain of attainability. You will note that this level is backed up by a moderate Fibonacci cluster nearby at 98.72. Overhead, October’s peak at 107.35 warrants attention as a potential resistance, with a breach exposing resistance at 109.33.

It is also worth noting that the monthly timeframe displays a clear view of the longer-term trend, which is north alongside momentum remaining just above positive (> 50.00), according to the Relative Strength Index (RSI).

Daily Price Closes South of 200-Day SMA

Price action on the daily timeframe reveals buyers struggled to secure a comfortable grip above the 200-day simple moving average (SMA) this week at 103.61, hampered by resistance at 104.15 on Wednesday. Friday’s close beneath the aforementioned SMA—together with a close under support at 103.62 (now marked resistance)—will be viewed by some technicians as a bearish trend signal.

Further adding to this is the 50-day SMA at 105.68 rotating south (since early November) after advancing higher since August and the 200-day SMA beginning to level out after advancing higher since October. Additionally, the trend (according to the price action) has been southbound on the daily scale since topping at 107.35 at the beginning of October (series of lower lows/highs).

Should sellers maintain a bearish posture beneath the 200-day SMA this week, a bearish scene may unfold and daily support could welcome price action at 102.92 (it would be about this point that we might also see the daily RSI connect with oversold territory), followed by support at 102.16.

Charts: TradingView

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