COMMENT-Dollar's surprising resilience is set to be tested

The dollar is holding up well despite speculation surrounding the timing of the first Fed rate cut but the technical picture suggests its resilience could be tested in the next month.

A 2.4% recovery in the dollar index since Dec. 28 was unable to prevent the 50-day moving average from crossing below the 200-day line. Known as a death cross, this moving average bear signal can warn of potential weakness.

The last death cross occurred on Jan. 5, 2023, and the dollar index subsequently lost nearly 5% in value in just under a month. The 2023 signal was strong given the sharply declining 50-day moving average and near vertical drop through the 200-day line.

Resistance points are close by with the 50-day moving average at 103.05 joined by the Jan. 5 103.10 high and a 38.2% Fibonacci retracement level at 103.18. If the current dollar rally clears these hurdles, on a closing basis, the death cross signal is likely to be negated.