The US dollar index (DXY), which reflects the strength of the US dollar (USD) against a basket of six key currencies, has seen a decrease for the second consecutive day, hovering around 97.90 during European trading hours on Thursday. A quick look at the daily chart reveals that the dollar index appears flat within a descending channel, indicating a persistent bearish trend.
Currently, the dollar index trades below both its 9- and 50-period exponential moving averages (EMAs), which seem to be limiting any upward movement and reinforcing a short-term bearish sentiment.
As of now, the 14-day Relative Strength Index (RSI) stands at 39.71, suggesting it’s nearing oversold conditions yet without reaching extremes. This indicates that while there is downward pressure, it’s not fully tapped out, as sellers still exert control within short- and intermediate-term trends.
There’s a possibility that DXY could test the two-month low of 97.62 from May 6. It might decline further towards the lower end of the descending channel, around 96.70, and even dip to a three-month low of 96.49. If it breaks this channel downwards, it could reveal 95.56, which would mark the lowest point since February 2022.
On the flip side, if the USD index manages to rally, it might bounce back to the 9-day EMA at 98.28, and then potentially reach the 50-day EMA of 98.66, which aligns with the channel’s boundary near 98.70. A sustained rise past this combined resistance could ignite a bullish surge, pushing the dollar index closer to its 11-month high of 100.64 from March 31.
The technical analysis in this piece utilized AI tools.
