- The Dollar has rallied 5% against a basket of currencies since the beginning of July.
- Price is currently being held within a resistance zone.
- A break above current levels would likely result in the lows of the year being un touched.
Dollar rallies into resistance zone
The Dollar has been on a tear for the past two months, rallying 5% against a basket of currencies. That’s its greatest two-month performance since last year. Looking at the technicals, DXY is currently in a critical spot, trading within a resistance zone. Fundamentals and the macroeconomic environment have been driving the Dollar higher, but the question is whether this will continue or if it’s time for a retracement back to 2023 lows.
Technical analysis
The chart can be kept very simple this time when we look at the Dollar. We can focus our attention on the resistance level that it is currently holding the Dollar at 104.3. A few days ago, a spinning top formed, but it has not been confirmed as a bearish reversal. We will need to wait to see if sellers emerge too strong at current levels, and we see the reversal candlestick pattern formation.
Additional bullish momentum could send the Dollar to the next resistance level 105.43 which would most likely result in the yearly low being officially put in. It would be unlikely to see those lows tested again if this current resistance does not hold because it would signal great bullish momentum and buying pressure. From there the only thing that could change that would be a shift in monetary policy or a black swan event.
