Technical Analysis – Dollar index loses steam as key resistance looms
August 21, 2023 2:29 pm
The US dollar index (futures) crossed above its 200-day simple moving average (SMA) for the first time since November 2022, but upside forces faded immediately around 103.55.
Strikingly, the tentative resistance line from March is marginally higher. Moreover, the RSI and Stochastic oscillator indicate overbought conditions, so there could be some profit-taking in the short term. The broken support-turned-resistance trendline drawn from the 2021 low of 89.49 could be another headache for the bulls around 104.30. If buyers successfully claim the latter, all eyes will turn to the 38.2% Fibonacci retracement level of the 114.71-99.19 downtrend at 105.11. Running higher and beyond the 2023 bar of 105.45, the next stop could be around the 50% Fibonacci of 106.95.
Alternatively, the bears may push below the 200-day SMA and the 23.6% Fibonacci of 102.80. If they succeed, the door will open for the 102.00 mark, which is halfway down of the 2020-2022 uptrend. Should the key 101.45 support zone give way, the decline might stretch down to 100.50.
All in all, the US dollar index is struggling to gain fresh positive momentum as a major obstacle lays overhead. A durable gain above 104.30 is now required to bring new buyers into the market.
The US dollar index (futures) crossed above its 200-day simple moving average (SMA) for the first time since November 2022, but upside forces faded immediately around 103.55.
Strikingly, the tentative resistance line from March is marginally higher. Moreover, the RSI and Stochastic oscillator indicate overbought conditions, so there could be some profit-taking in the short term. The broken support-turned-resistance trendline drawn from the 2021 low of 89.49 could be another headache for the bulls around 104.30. If buyers successfully claim the latter, all eyes will turn to the 38.2% Fibonacci retracement level of the 114.71-99.19 downtrend at 105.11. Running higher and beyond the 2023 bar of 105.45, the next stop could be around the 50% Fibonacci of 106.95.
Alternatively, the bears may push below the 200-day SMA and the 23.6% Fibonacci of 102.80. If they succeed, the door will open for the 102.00 mark, which is halfway down of the 2020-2022 uptrend. Should the key 101.45 support zone give way, the decline might stretch down to 100.50.
All in all, the US dollar index is struggling to gain fresh positive momentum as a major obstacle lays overhead. A durable gain above 104.30 is now required to bring new buyers into the market.
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