Technical Analysis – US dollar index retreats again near 90.00; bearish in long-term

Melina Deltas, XM Investment Research Desk

The US dollar index is recording a strong sell-off since March 2020, creating a 33-month low around 89.14. Zooming at the last seven-weeks, the price is moving sideways, finding strong resistance at the 90.93 barrier and the 50-day simple moving average (SMA).

This week, the index is on the backfoot and the technical indicators suggest that the market could ease a little bit in the short-term. The stochastic oscillator is approaching the oversold territory again, while the MACD is heading horizontally above its trigger line and below the zero level.

Should the market extend losses, support could be met at the multi-month low of 89.14 before slipping towards the 88.90 support, registered in April 2018. A significant leg below this area could send prices between the 88.48-88.13 zone, taken from the lows in March and February 2018.

On the flip side, if the market bounces up, immediate resistance could be met at the 90.93 obstacle near the 50-day SMA. Steeper increases could drive the dollar index north towards the 91.68 resistance ahead of the 23.6% Fibonacci retracement level of the down leg from 103.82 to 89.14 at 92.60, but it first needs to overcome the 100-day SMA at 92.10.

In the bigger picture, the index is bearish as long as it holds below the SMAs. In case it violates these lines, bulls could take the upper hand.