Key takeout
- The US Dollar index stabilized on Monday after reaching three-year lows last week, marking its worst first half since 2002.
- With recent sales picking up, there are signs this could lead to further declines following the index’s drop from a weakened flag pattern last month.
- Investors should keep an eye on critical support levels for the US Dollar Index around 95 and 90, while also watching overhead areas near 101 and 107.
The US Dollar Index (DXY) held steady on Monday after falling to a three-year low last week, indicating the Greenback is experiencing its roughest first half since 2002.
This year, the Index faces downward pressure due to concerns about the US economic outlook and America’s position in the global financial scene, influenced by Washington’s erratic tariff strategies.
Since the beginning of the year, the US dollar index, which compares the greenback against a basket of currencies, has lost nearly 10% of its value. It dipped to around 98.15 on Monday from a low of 97.60 last Thursday.
Next, we’ll delve into the weekly charts of the US Dollar Index and employ technical analysis to pinpoint key levels that investors might be eyeing.
Breakdown of bearish flag patterns
Since dropping below a descending triangle in early April, the US dollar index formed a bearish flag pattern, signaling a persistent downward trend.
Indeed, after the index collapsed from this flag pattern last month, sales were seen to resume, potentially indicating more declines ahead. The relative strength index does seem to suggest the momentum of bearish prices is just above sales levels, which, interestingly, has coincided with multiple significant increases.
It’s important to identify two key support levels for the US Dollar Index and to keep an eye on potential overhead areas during any recovery efforts.
Important support levels to monitor
If selling continues, a drop towards 95 is likely. This area may provide support, corresponding to trendlines connecting notable peaks and troughs between November 2017 and January 2022.
A significant drop below this level could trigger a swift decline to around 90. Traders might see buying opportunities close to the major lows formed on the charts in the first half of 2021.
Interestingly, this range aligns with a strong downtrend preceding the bearish flag and coincides with anticipated bar pattern targets based on breakdown points, hinting at how ongoing downward movement may play out.
Overhead areas worth monitoring
As the index recovers, investors should first observe the 101 levels, which could present substantial resistance against a backdrop of recent highs located just below the peak from March 2020 and along the lower trend line of the downward triangle.
If the index surpasses this level, it may rise towards 107, a zone where selling pressure could manifest, coinciding with prominent peaks in late October and November 2023.
Key takeout
- The US Dollar index stabilized on Monday after reaching three-year lows last week, marking its worst first half since 2002.
- With recent sales picking up, there are signs this could lead to further declines following the index’s drop from a weakened flag pattern last month.
- Investors should keep an eye on critical support levels for the US Dollar Index around 95 and 90, while also watching overhead areas near 101 and 107.
The US Dollar Index (DXY) held steady on Monday after falling to a three-year low last week, indicating the Greenback is experiencing its roughest first half since 2002.
This year, the Index faces downward pressure due to concerns about the US economic outlook and America’s position in the global financial scene, influenced by Washington’s erratic tariff strategies.
Since the beginning of the year, the US dollar index, which compares the greenback against a basket of currencies, has lost nearly 10% of its value. It dipped to around 98.15 on Monday from a low of 97.60 last Thursday.
Next, we’ll delve into the weekly charts of the US Dollar Index and employ technical analysis to pinpoint key levels that investors might be eyeing.
Breakdown of bearish flag patterns
Since dropping below a descending triangle in early April, the US dollar index formed a bearish flag pattern, signaling a persistent downward trend.
Indeed, after the index collapsed from this flag pattern last month, sales were seen to resume, potentially indicating more declines ahead. The relative strength index does seem to suggest the momentum of bearish prices is just above sales levels, which, interestingly, has coincided with multiple significant increases.
It’s important to identify two key support levels for the US Dollar Index and to keep an eye on potential overhead areas during any recovery efforts.
Important support levels to monitor
If selling continues, a drop towards 95 is likely. This area may provide support, corresponding to trendlines connecting notable peaks and troughs between November 2017 and January 2022.
A significant drop below this level could trigger a swift decline to around 90. Traders might see buying opportunities close to the major lows formed on the charts in the first half of 2021.
Interestingly, this range aligns with a strong downtrend preceding the bearish flag and coincides with anticipated bar pattern targets based on breakdown points, hinting at how ongoing downward movement may play out.
Overhead areas worth monitoring
As the index recovers, investors should first observe the 101 levels, which could present substantial resistance against a backdrop of recent highs located just below the peak from March 2020 and along the lower trend line of the downward triangle.
If the index surpasses this level, it may rise towards 107, a zone where selling pressure could manifest, coinciding with prominent peaks in late October and November 2023.
