From the higher timeframe perspective, DXY is currently hovering within a key monthly Fair Value Gap (FVG), marked in red. This zone serves as a critical point of interest and could dictate the next directional bias for the dollar.
Key Observations:
Current FVG Zone:
-Price is consolidating within the monthly FVG. A close below this zone would provide stronger confirmation of a bearish move targeting lower liquidity levels.
Bearish Bias:
-The recent price action indicates weakness as sellside liquidity (SSL) is beginning to show signs of attraction.
-The presence of significant sellside liquidity targets below, including:
-105.411 (Weekly SSL - Sweep)
-103.370 (Weekly SSL - Next Zone)
-100.215 (Major Daily SSL Zone)
Messy Market Conditions:
-Due to fluctuating macroeconomic factors, including USD news events, we may observe temporary rallies or retracements. However, these are likely to form lower highs before continuing the descent.
Confirmation Levels:
-Bearish Confirmation: A daily or weekly close below the monthly FVG would solidify the bearish case, signaling that sellside liquidity at 105.411 and lower levels are likely next.
-Bullish Risk: If the current FVG holds as support and price pushes higher, we could see an attempt to retest higher zones (e.g., 109.535) before resuming downside momentum.
Conclusion:
The expectation is for DXY to drop towards sellside liquidity levels at 105.411, 103.370, and potentially as low as 100.215. However, traders should await a clean confirmation (such as a close below the monthly FVG) to validate the move.
DYOR (Do Your Own Research) and trade safely amidst potential market volatility!
Let me know if you'd like any refinements!