- The US dollar DXY index stops the decline, it is not out of the woods yet.
- The bears need a sustained break below the September lows of 91.75.
- The decrease in electoral uncertainty in the US increases the appetite for risk and weighs on the dollar.
The bears are taking a breather early in the European session on Monday after last week’s sharp decline, as the US Dollar DXY index is trading moderately higher at 92.30.
Despite the pullback, the DXY index remains close to the two-month lows of 92.13, previously reached during the Asian session.
With Joe Biden being the 46th US president, markets are expecting the uncertainty surrounding the elections to subside as they predict additional fiscal stimulus, which bodes ill for the safe-haven US dollar.
From a short-term technical perspective, the DXY index is likely to face immediate resistance at the bearish 21-hour moving average at 92.29 on its way to recovery.
If the bulls manage to regain this level, the next hurdle is seen at the crucial horizontal support, now turned into resistance at 92.49. Higher up, the 50 hourly SMA at 92.61 could act as a strong barrier.
The latest bullish move is supported by a further rally in the RSI, which is slowly advancing at the 40.41 level, after bouncing off the oversold territory.
Looking down, a break below the 92.00 level could open the doors towards the September low of 91.75.
Selling pressure is likely to accelerate below that level, with support from the 1.5-month downtrend line at 91.55 targeting sellers.
US Dollar Index DXY 1 hour chart
Credits: Forex Street
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