US Dollar Index Price Analysis: DXY dives to one-week lows, around 92.65
|- The prevalent risk-on mood dragged DXY to one-week lows on the first day of the week.
- The slide along a descending trend channel constitutes the formation of a bullish flag.
- Bullish oscillators on the daily chart further add credence to the constructive setup.
The US Dollar Index (DXY) maintained its offered tone through the early North American session and dropped to one-week lows, around the 92.70-65 region in the last hour.
As investors looked past Friday's blockbuster US NFP report, the prevalent risk-on mood was seen as a key factor undermining the safe-haven greenback. Even a modest uptick in the US Treasury bond yields, upbeat US PMI prints failed to impress the USD bulls, albeit the upbeat US economic outlook should help limit any further losses.
Looking at the technical picture, the recent pullback from multi-month tops has been along a downward sloping channel. Given that the DXY has now slipped below 200-hour SMA, the intraday bias seems tilted in favour of bearish traders. The negative outlook is reinforced by bearish technical indicators on hourly charts.
That said, the mentioned channel constitutes the formation of a bullish flag pattern. Moreover, oscillators on the daily chart – though have been retreating from higher levels – are still holding comfortably in the bullish territory. Hence, any subsequent fall might still be seen as a buying opportunity.
Meanwhile, the lower boundary of the mentioned channel coincides with the 23.6% Fibonacci level of the 103.00-89.21 downfall. This, in turn, should now act as a strong base for the DXY, which if broken decisively will set the stage for additional losses towards testing the very important 200-day SMA, around mid-92.00s.
On the flip side, the 92.85-90 region (200-hour SMA) now seems to act as immediate resistance. This is followed by the top boundary of the descending channel, currently near the 93.10 region. A convincing breakthrough will confirm a bullish breakout and push the DXY back towards multi-month tops, around the 93.45-50 region.
DXY 1-hour chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.