The recent rebound in the US Dollar Index (DXY) appears to have stalled as it’s now little changed from the start of the week, and a further decline in price may push the Relative Strength Index (RSI) into oversold territory for the first time since July.
DXY Outlook
DXY consolidates after failing to defend the February low (102.90) and the Greenback may continue to hold below the 50-Day SMA (103.51) amid the failed attempt to push back above the 103.30 (50% Fibonacci extension) to 103.50 (50% Fibonacci retracement) region.
Lack of momentum to close below 102.60 (61.8% Fibonacci retracement) may continue to generate range bound conditions in DXY, but the US Dollar Index may attempt to further retrace the decline from the start of the month if it climbs back above the moving average.
At the same time, a breach below the monthly low (102.36) may push DXY towards 101.80 (61.8% Fibonacci retracement), with a move below 30 in the RSI likely to be accompanied by a further decline in the US Dollar Index like the price action from last year.
Next area of interest coming in around the January low (101.34), with a break/close below 101.30 (78.6% Fibonacci retracement) opening up the 100.50 (23.6% Fibonacci retracement) to 100.80 (38.2% Fibonacci extension) area, which incorporates the December low (100.62).
--- Written by David Song, Strategist
DXY Outlook
DXY consolidates after failing to defend the February low (102.90) and the Greenback may continue to hold below the 50-Day SMA (103.51) amid the failed attempt to push back above the 103.30 (50% Fibonacci extension) to 103.50 (50% Fibonacci retracement) region.
Lack of momentum to close below 102.60 (61.8% Fibonacci retracement) may continue to generate range bound conditions in DXY, but the US Dollar Index may attempt to further retrace the decline from the start of the month if it climbs back above the moving average.
At the same time, a breach below the monthly low (102.36) may push DXY towards 101.80 (61.8% Fibonacci retracement), with a move below 30 in the RSI likely to be accompanied by a further decline in the US Dollar Index like the price action from last year.
Next area of interest coming in around the January low (101.34), with a break/close below 101.30 (78.6% Fibonacci retracement) opening up the 100.50 (23.6% Fibonacci retracement) to 100.80 (38.2% Fibonacci extension) area, which incorporates the December low (100.62).
--- Written by David Song, Strategist