- US dollar index pauses downleg near important support trendline
- Technical signals are uncertain; sellers wait below 104
The US dollar index is trading at an attractive level around the protective trendline that joins the lows from December 2023 and March 2024 near 104.00. The index could enter a new bullish phase, though the technical outlook cannot guarantee an immediate rebound.
Although the stochastic oscillator is near its 20 oversold level, the RSI keeps fluctuating below its 50 neutral mark and the MACD remains negatively charged below its red signal line. The price itself has yet to climb above its simple moving averages (SMAs,) adding to the negative risks.
A step below the 104.00 round level is expected to trigger the next bearish action, squeezing the price towards the 103.60 constraining territory. A continuation lower could stabilize around May’s support line at 103.18, while the 23.6% Fibonacci retracement of the September 2022-July 2023 downtrend could tackle steeper declines along with the long-term descending line drawn from September 2022 at 102.70.
Alternatively, the bulls might attempt to climb above the restrictive 20-day SMA at 104.54. The tentative descending trendline from May’s peak could limit bullish actions ahead of the 38.2% Fibonacci mark of 105.12. If the rally continues, the spotlight will fall on the 105.50 area.
Overall, despite the discouraging technical signals, the US dollar index might have another opportunity to rotate higher if the 104.00 floor holds.
