US Dollar Talking Points
The US Dollar Index (DXY) bounces back from a fresh monthly low (91.78) in an attempt to retrace the decline following the Federal Reserve interest rate decision, but recent price action casts a bearish outlook for the Greenback as it extends the series of lower highs and lows from earlier this week.
Technical Forecast for US Dollar: Bearish
The four-day decline in the DXY marks the longest stretch of losses since May as it fails to test the yearly high (93.44) in July, and the US Dollar Index may continue to give back the advance from the May low (89.54) as the Relative Strength Index (RSI) snaps the upward trend that was established during the same period.
Source: Trading View
In turn, the DXY looks poised to track the range from the first half of the year as it fails to retain the opening range for July, with the RSI now revealing a downward trend after briefly pushing into overbought territory earlier this month.
With that said, lack of momentum to hold above the Fibonacci overlap around 91.80 (38.2% retracement) to 92.10 (23.6% expansion) opens up the 91.30 (50% retracement) region, which largely lines up with the 200-Day SMA (91.34), with the next area of interest coming in around 90.80 (61.8% retracement).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
