The U.S. Dollar Index (DXY) came close o the 105.650 Resistance of the January 06 High and currently has been rejected. This was a level that failed to break above the 1D MA200 (orange trend-line), which is holding as Resistance since December and is also inside the Pivot Zone that formed three rejections and one rebound since May 13 2022.
With the RSI almost breaching into the overbought zone (70.00) and getting rejected, it is very likely that the 105.650 Resistance will turn into a Double Top and reject the price lower. With the long-term pattern since the September top being so far a Channel Down, it is likely that the rejection will deliver Lower Lows for the Channel, initially to Support 2 (Target 99.500) and in extension Support 3 (Target 97.500), as it appears that the Higher Lows gaps of the uptrend are systematically targeted during this downtrend.
All eyes on this resistance level. Last time rejection triggered a strong equity rally in Jan-23. Given the new information since the beginning of Feb-23 that FED will not pivot soon I do not really consider a huge drop in DXY. Similar pattern might hold for 2Y yields, which are close to the strong resistance at 4,87%. I see very choppy and indecisive markets in the short term until the next FED meeting in 3 weeks from now.
louistran_016
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@DBAKIEV, the FED pivot is only 1 component of DXY strength / weakness. Last year DXY blasted through the level we've not seen in 20 years due to the Fed fund rate and US bond yields rised the fastest comparing to other developed economies. Now we almost hit the ceiling rate with not much room left, while Europe central banks have a lot more room to push, money will flow to EU chasing the yields