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After a sharp decline from its 110 peak, the DXY has stabilized near the 97–98 zone, with recent price action suggesting a potential base, though the overall trend remains weak.
Key Technical Observations
- Moving Averages Bearish: The 15-day moving average (107.10) and 20-day moving average (107.36) remain tightly aligned but slope downward, reflecting persistent downside pressure. The lack of divergence shows consolidation, not recovery yet.
- Trend Structure: The index is in a clear downtrend, marked by lower highs and lower lows since late 2024. Recent price action is more sideways, indicating loss of bearish momentum but not yet a confirmed reversal.
- RSI Neutralizing: RSI stands at 51.61, just above neutral. This signals fading selling pressure, with momentum balanced between buyers and sellers.
- Support Holding: Price repeatedly held the 97.50 floor, showing resilience. However, sellers continue to cap upside near the 98.50 resistance.
Macro & Market Context
- Fed Policy Outlook: Markets continue to price in potential Fed cuts later in 2025, weighing on the US dollar.
- Risk Sentiment: Risk-on equities and stronger EM currencies keep the USD under pressure.
- Global Divergences: The ECB and BoE remain relatively hawkish, favouring EUR and GBP strength against USD.
Key Levels to Watch
- Immediate Resistance: 98.50 – short-term rejection zone.
- Next Resistance: 100.00 – psychological level, aligns with past breakdown.
- Immediate Support: 97.50 – key horizontal support.
- Deeper Support: 96.00 – next major floor if selling resumes.
Bias: Neutral-to-Bearish
Momentum is showing signs of balance after extended weakness, but the broader structure still favours sellers unless the index can reclaim 99.00. A decisive push above 100.00 would shift bias toward neutral.
The index is trying to stabilize, but selling rallies near resistance (98.50–99.00) remains the safer approach. Buyers should wait for a confirmed breakout above 100.00 before committing to bullish positions. Until then, the index is vulnerable to drifting lower toward 96.00.
