Introduction
The U.S. Dollar Index (DXY) continues its slide, slipping further below the 97.80–98.50 support zone. With the RSI sustaining below 50 and moving averages trending down, the USD is under growing pressure as macroeconomic and geopolitical currents erode demand for the greenback.
Technical Breakdown
| Metric | Information |
|---|---|
| Price | 97.18 |
| Key Breakdown | Below ~98.00 support zone (now resistance) |
| 50-day MA | 99.29 — sharply above current price, adding to downside bias |
| 200-day MA | 103.80 — bearish alignment maintained |
| RSI (14) | 32.04 — nearing oversold, but no bullish divergence present |
The DXY failed to hold horizontal support and now trades beneath both major moving averages. The breakdown lacks a significant bullish response; follow-through to the downside is likely. This is dependent, however, on the geopolitical tensions between the US and the Middle East. RSI at ~32 reflects oversold momentum, but in a persistent downtrend, this condition alone is not a reversal trigger.
Macro Context Brief
- Rate Cut Expectations Rise: Fed Funds Futures are pricing in two rate cuts by year-end, reducing USD yield attractiveness.
- Geopolitical Risk Shift: Rising tensions in the Middle East and Europe have not triggered a flight-to-quality into USD — instead, investors are favoring Gold and Euro, signaling diminishing confidence in USD’s haven status.
- Trump Administration Uncertainty: Ongoing tariff talk and global realignment under the current U.S. administration are fostering uncertainty in FX markets, diminishing demand for USD reserves.
Probability Table – DXY Scenarios
| Scenario | Probability | Reasoning |
|---|---|---|
| Continued decline to 95.50–96.00 | 55% | Clean technical breakdown, weak bid tone, macro dovishness |
| Consolidation between 97–98 | 30% | Short-term RSI oversold conditions may cause brief stabilization |
| Quick bounce back above 98.50 | 15% | Would need a sudden hawkish shift or flight to safety |
Final Take
The DXY breakdown confirms a continuation of the USD bear trend, with limited near-term catalysts for a rebound. While oversold conditions might slow the pace of decline, the path of least resistance remains lower.
Short-term: Bearish
Medium-term: Bearish
Long-term: Dependent on Fed pivot and global reserve confidence — but structurally weak
