The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, extended its decline for a second straight session, hovering around 98.60 during Asian trading on Tuesday.
The daily chart indicates that DXY is testing the lower boundary of its ascending channel pattern, signaling a potential shift in momentum from bullish to bearish.
Technical indicators suggest neutral bias
Short-term momentum has weakened as the index slipped below the nine-day Exponential Moving Average (EMA), reflecting fading buying pressure. Meanwhile, the 14-day Relative Strength Index (RSI) stands near the 50 mark, suggesting a neutral market stance. Traders are likely to await further price confirmation before committing to new positions.
Key levels to watch: 98.50 support and 99.56 resistance
On the downside, a decisive break below the ascending channel’s lower boundary near the psychological 98.50 level could expose the next support at the 50-day EMA around 98.36. Sustained weakness below this area might accelerate losses toward 96.22, the lowest level since February 2022, reached on September 17.
Alternatively, a rebound above the nine-day EMA at 98.76 could revive bullish momentum, potentially driving the index toward the two-month high of 99.56 recorded on October 9. Further resistance is seen at the five-month peak of 100.26, followed by the channel’s upper boundary near 101.00.
