- DXY falls further and breaks below 99.00 with some conviction.
- The drop is seen as corrective and could extend to 97.50.
The US Dollar Index (DXY) it is again under moderate bearish pressure and revisits the area well below the 99.00 level in the middle of the week.
Considering the recent price action, the corrective move in the index has the potential to extend to 97.50, where the January highs are found (Jan 28). Below that comes temporary support at the 20-day SMA today at 96.91.
In light of the recent price action, more gains are likely for the time being. That being said, the next hurdle lines up at the 99.97 level (25 May 2020 high), closely followed by the psychological 100.00 mark. However, a continuation of the leg to the downside after the current overbought condition of the index should not be ruled out.
The current bullish stance on the index remains supported by the 5-month line today near 95.70, while the longer-term outlook for the dollar is seen as constructive above the 200-day SMA at 94.22.
DXY daily chart
Additional technical levels
Source: Fx Street
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