The US Dollar Index (DXY) is seeing a slight decline after starting the day with a positive gap, hovering around 102.00 during the Asian trading hours on Monday.
In the short term, the outlook appears optimistic as the Dollar Index stays above the 50-day Exponential Moving Average (EMA) and is testing the nine-day EMA, which serves as immediate resistance. With the 14-day Relative Strength Index (RSI) at 58.17, it’s leaning bullish but not yet in overbought territory, indicating that positive momentum may continue. Meanwhile, the FXS Fed Sentiment Index, stabilizing around 127.51, suggests that expectations surrounding the Federal Reserve are no longer fueling strong upward movements.
Furthermore, daily chart analysis shows the dollar index remains within an ascending channel pattern, which points to continuing bullish momentum.
The index may encounter its first barrier at the nine-day EMA, currently at 102.03. If it breaks above this short-term average, it could reinforce the bullish sentiment and help the dollar index aim for an 18-month high of 102.94, achieved on October 14, and possibly the upper boundary of the ascending wedge at 103.80.
On the flip side, the dollar index could find immediate support at the lower edge of the ascending channel near 101.70, followed by the 50-day EMA at 100.91. Should the index decline further, it might reach the five-month low of 98.56, noted on August 20.
Caution Among Dollar Bulls as Focus Shifts to Sustainability of Gains
Economists from DBS Group Research imply that the momentum behind the dollar could be at a turning point. They note, “the upcoming week might transition from extending the recent USD rally to reevaluating its sustainability,” as investors assess how long this latest strength of the dollar might last.
(The technical analysis of this content was produced with assistance from an AI tool.)
