Technical Analysis
Breakdown Summary
- The Dollar Index is sitting below the 100.64 pivot level and is now consolidating inside a multi-month demand zone (98.50–100.50).
- Both 50-day and 200-day moving averages are above current price and bearishly sloped, confirming a loss of trend strength.
- RSI remains depressed at 40, struggling to reclaim momentum, suggesting ongoing weakness or indecision.
- A failed attempt to reclaim the 100.64 pivot level earlier this month resulted in another sharp drop, confirming resistance.
Bearish Signals
- Lower highs and lower lows since mid-April rejection near 103.00.
- The death cross (50-day < 200-day) remains intact and was respected on retests.
- Price remains below both MAs, and the 200-day MA now aligns with a previous supply zone between 103–104.50.
Downside Targets if 98.50 breaks:
- 97.50 – Year-to-date low
- 96.91 – S1 Pivot level and strong historical support
Bullish Counterpoints
- The Dollar is sitting in a long-term support zone that has held during major turning points in the past.
- RSI is not deeply oversold, leaving room for a relief rally if economic data surprises to the upside.
- Positive divergence could begin to develop if price stabilizes while RSI turns up.
| Bias | Probability | Trigger/Confirmation | Target/Range |
|---|---|---|---|
| Bearish Continuation | 65% | Break and close below 98.50 | 97.50 → 96.90 zone |
| Short-Term Bounce | 35% | Reclaim of 100.64 + RSI > 50 | 101.18 (50 MA), then 103.36 (R1) |
Key Levels to Watch
| Type | Level | Significance |
|---|---|---|
| Resistance | 100.64 | Former pivot – reclaim needed for bulls |
| Resistance | 101.18 | 50-day MA – trend-defining zone |
| Resistance | 103.36 | R1 pivot and confluence zone |
| Support | 98.50 | Key support zone – bears aim here |
| Support | 97.50 | Major demand level (Q4 2023 low) |
| Support | 96.91 | S1 Pivot, multi-year base support |
Where to From Here for the Dollar?
The USD Index remains under pressure, technically and fundamentally. With the price structure weakening and key support zones being tested, the next few sessions will be critical:
- Bears are favored below 100.64 and will look to break 98.50.
- A bullish reversal would require a base at current support plus reclaiming the 50-day MA – not currently confirmed.
Until proven otherwise, the path of least resistance remains lower, especially amid easing U.S. inflation and growing Fed dovishness.
