According to the US Dollar Index, the US dollar (USD) had a rather disappointing week, falling -1.1% against a basket of six major currencies. On the month, the buck is also -1.4% lower and, assuming a continued negative trajectory this month, is on track to snap a two-month bullish phase.

The FP Markets Research Team noted in numerous posts that the longer-term picture for the USD is tilted to the upside, trending northbound since 2008 (see monthly chart), which continues to remain the case. Additional technical observations, however, show buyers and sellers have essentially been rudderless since early 2023, squaring off just north of monthly support, coming in at 99.67.

Daily Chart Favours Bears

While the monthly timeframe continues to exhibit a bullish trend (unlikely to change until monthly support from 99.67 is consumed), price action on the daily timeframe concluded last week confirming the beginning of a downtrend (lower high at the 104.29 1 March top followed by a subsequent lower low on Friday at 102.36). Recent price movement guided the Index through the 200-day and 50-day simple moving averages (SMA) at 103.72 and 103.46, respectively, and engulfed bids at support from 103.62 and 102.92 (now marked resistance).

Even though the Relative Strength Index (RSI) is seen rebounding from the 50.00 centreline on the monthly scale and nearing the oversold region on the daily chart, price action on the daily exhibits scope to explore deeper water this week until reaching support between 101.44 and 101.77 after breaching daily support at 102.92.

102.92 to Be Retested as Resistance?

Given the lack of nearby support on the monthly and daily timeframes this week, price action retesting the underside of 102.92 to form daily resistance could be on the table. Assuming the unit holds south of this level, traders, irrespective of the technique used to enter the market, may take aim at the daily support area highlighted above at 101.44-101.77.

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