US Dollar Price Analysis: Bears taking out short-term structure, 103 vulnerable of a test below
|- DXY is being sold off on the shorter-term time frames, 103.13-eyed near-term, 102.39 thereafter.
- The bias remains bullish on the daily chart until a break of downside structure, or 101.297.
Despite the persistent message from Fed members that there is a ''need to raise interest rates 'a good deal more' over the coming months,'' the US dollar has been on the back foot.
While it has been breaking the short-term structure and the trend from 101.297, as illustrated below, the long-term bullish playbook remains very much in play, at least from a technical standpoint.
The following is a top-down analysis that arrives at a bullish bias for the longer term, albeit noting the prospects of a near-term significant correction on the shorter-term charts.
DXY H1 charts
As illustrated in the hourly time frame, the price has broken the structure of the bullish short-term trend and the market is biased to the downside. Zooming in, we can see the market structure broken down through a lense:
The recent bearish impulse took out a number of short-term higher lows in a break of structures (BoS). Therefore, the downside is to play for. However, there is a price imbalance that could be mitigated prior to a full-on move to the downside.
A 61.8% Fibo aligns with the first area of imbalance around 104.32. Thereafter, a restest of a liquidity area or 'order block' (OB) could be the last defence for a move down to the next significant demand area near 103.13, or there about.
DXY daily chart
Meanwhile, however, from a daily perspective, the price remains in a bullish uptrend. The market structure is as follows:
The break of structure led to a higher high. What could be playing out is a mere run on liquidity across the various currencies supporting the index and the US dollar, aka, a healthy correction in the forex market. In the DXY index, there has already been a 61.8% Fibo correction to 103.33 and a touch below where the price rallied.
However, given the breakdown of the short-term market structure, as illustrated above, then this leaves the price imbalance just below 103 vulnerable. Below there, we have a demand area's mid point located at 102.3904, another at 101.9889 and then finally 101.336.
DXY bullish
In any scenario, the bias remains bullish on the daily chart until a break of downside structure, or 101.297, as follows:
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.