US Dollar Talking Points
The US Dollar Index (DXY) attempts to retrace the decline from the earlier this week as it snaps the fresh series of lower highs and lows, butthe opening range for April raises the scope for a further decline in the Greenback as the monthly high (93.34) lines up with the first day of the month.
Technical Forecast for US Dollar: Bearish
The US Dollar Index (DXY) appears to have reversed course ahead of the November high (94.30) amid the recent weakness in longer-dated US Treasury yields, and the technical outlook may become increasingly bearish as DXY trades back below the 200-Day SMA (92.34).
DXY Index Daily Chart
Source: Trading View
It remains to be seen if the weakness during the first full week of April will gather pace as the 50-Day SMA (91.52) reflects a positive slope, but the price action from the start of 2021 shows a tendency where the US Dollar Index carves either the high or the low of the month during the opening week.
If the trend persists, the decline from the April high (93.34) may gather pace over the over the coming days, and DXY may trade to fresh monthly lows as the Relative Strength Index (RSI) fails to preserve the upward trend from earlier this year.
The break of trendline support in the RSI suggests the bullish momentum will continue to abate following the failed attempt to test the November high (94.30), and the US Dollar Index may continue to give back the advance from earlier this year as it struggles to hold above the 200-Day SMA (92.34).
With that said, a break/close below the 91.90 (23.6% expansion) to 92.10 (23.6% expansion) region may push DXY back below the 50-Day SMA (91.52), and failure to hold above the moving average may bring the Fibonacci overlap around 90.20 (50% retracement) to 90.50 (38.2% expansion) on the radar if the Dollar Index clears the March low (90.63).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
