The US Dollar Index (DXY) extended its decline for a second consecutive session on Monday, retreating to around 100.60 during Asian trading hours. The move comes as short-term momentum weakens, despite an overall bullish technical structure on the daily chart.
The index, which measures the USD’s performance against a basket of six major currencies, continues to trade within an ascending channel, reflecting a broader upward trend. It remains above the nine-day Exponential Moving Average (EMA), signaling that short-term momentum is still intact. However, the outlook is tempered by a subdued 14-day Relative Strength Index (RSI), which remains below the neutral 50 level—suggesting underlying bearish pressure. A decisive move above 50 on the RSI would be required to confirm a shift toward renewed bullish momentum.
On the upside, the DXY faces immediate resistance at the upper boundary of the ascending channel near 100.80. A breakout above this level would reinforce the positive bias and could trigger a push toward the 50-day EMA at 101.81. Surpassing that technical barrier may strengthen medium-term sentiment, paving the way for a test of the two-month high at 104.37, last seen on April 1.
Conversely, initial support lies at the nine-day EMA, currently positioned at 100.10. A drop below this level could undermine short-term momentum, potentially driving the index toward the lower boundary of the channel around 99.50. A further breakdown could open the door for a deeper retracement toward the 97.91 level—its lowest mark since March 2022, recorded on April 21.
Traders will likely keep a close watch on key macroeconomic catalysts, including upcoming US inflation data and Federal Reserve commentary, for further direction in the USD’s path.
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