In the latest market session, the U.S. Dollar Index (DX) appears to be struggling to regain its footing after a period of decline. The recent rise in Consumer Price Index (CPI), hints at possible underlying USD weakness.
Technical analysis: Currently, the DXY is exhibiting signs of a downtrend, capped by the resistance level near 103.00, as denoted by the red line on the chart. The Index has consistently made lower highs, which aligns with a bearish outlook. It's also notable that the price is currently below a descending trendline, which traditionally indicates a selling opportunity. However, there's a small support zone marked in green around 102.70 - 102.75, which has so far prevented further depreciation. A decisive move below this support zone could lead to further bearish momentum, potentially establishing new targets to the downside. Conversely, a break above the descending trendline and the 103.00 resistance level might signal a shift in momentum to the upside, although this seems less likely given the current chart pattern and the broader market context.
Our position: With the DXY showing continued signs of weakness, and in the absence of bullish catalysts, our stance is cautious. We are considering the potential for short positions, especially if the price breaks below the current support zone. Given the Fed's pause in rate hikes, we also remain open to reassessing should the situation change, but for now, we're looking for sell opportunities.
Technical analysis: Currently, the DXY is exhibiting signs of a downtrend, capped by the resistance level near 103.00, as denoted by the red line on the chart. The Index has consistently made lower highs, which aligns with a bearish outlook. It's also notable that the price is currently below a descending trendline, which traditionally indicates a selling opportunity. However, there's a small support zone marked in green around 102.70 - 102.75, which has so far prevented further depreciation. A decisive move below this support zone could lead to further bearish momentum, potentially establishing new targets to the downside. Conversely, a break above the descending trendline and the 103.00 resistance level might signal a shift in momentum to the upside, although this seems less likely given the current chart pattern and the broader market context.
Our position: With the DXY showing continued signs of weakness, and in the absence of bullish catalysts, our stance is cautious. We are considering the potential for short positions, especially if the price breaks below the current support zone. Given the Fed's pause in rate hikes, we also remain open to reassessing should the situation change, but for now, we're looking for sell opportunities.