The dollar index is gradually losing its status. It has been under pressure for nine consecutive trading days, yet the market has been unable to accelerate or break this downward trend. Individual currencies are testing key local levels. The ability to eventually break through these issues could set a trend for the coming weeks.
FxPro senior analyst Alex Kuptsikevich notes that the dollar index has fallen from a high of 104.85 on February 14th to 103.7. This level was a strong resistance from the end of November to the beginning of February. It now exists as a support level. This is also a significant historical level for the dollar index, as it was the high point of March 2020, which was only breached after 26 months.
It is logical to expect an increase in volatility in this area because this is where global trend decisions occur. A decisive downturn would rapidly lead to last year's lows around 100.0. Approaching these levels would result in the trend turning into further continuous decline of the dollar over several months, with a final target in the 90.0-92.5 range.
The ability to mount an offensive from these levels would demonstrate the strong power of dollar bulls after a pause. In this case, the DXY index could soon return to the highs seen last October to November. After that, the dollar would rebound to multi-year highs of 114.5-115.0.
This week, maintaining balance for the dollar depends on the shoulders of the 10 members of the Federal Open Market Committee scheduled to speak this week. In terms of macroeconomic data, the market will closely monitor personal income and expenditure and the personal consumption expenditure price index on Thursday.
Technically, EURUSD, AUDUSD, and USDCHF are trading near their 200-day moving averages, GBPUSD is trading near its 50-day moving average, and USDJPY is approaching the 151 level, with USDJPY having undergone a vigorous multi-week bearish reversal in October 2022 and November 2023.
