- The US Dollar Index extends its weekly gains, up 1%.
- Rising US bond yields support the recent trend in the dollar.
- A break above the 4-hour 200 SMA could push the DXY towards 93.00.
The US Dollar Index, which measures the performance of the dollar against six major currencies, is recovering for the third day in a row, last seen at 92.64, an increase of 0.13%.
In the last three days, the DXY has rallied almost 1%. It has benefited primarily from rising US bond yields. However, the 10-year benchmark yield is down two basis points (bps) to 1,355% at the time of writing.
4 hour DXY chart
Although the daily chart supports the bullish bias, the approach to a shorter time frame represents a brutal battle between the bulls and the bears. The dollar is trading near solid resistance at 92.78. That level has been unsuccessfully tested, suggesting that the price is consolidating between the aforementioned level and the 200 Simple Moving Average (SMA) at 92.65.
A break above the 92.65-92.78 range could expose the next resistance at the August high at 93.18. Once that level is cleared, the next bid level would be 93.72.
On the other hand, the failure of the 200 SMA could put downward pressure on the US dollar index. The first support would be the 50 SMA at 92.47. A breakout of the latter would push the DXY towards the September lows around 92.10.
The Relative Strength Index is at 64.53, pointing down, but still supporting a bullish bias.