They raise the stakes for a bigger drop

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  • The DXY manages to regain some composure after hitting lows in two years.
  • In case of more losses, I would aim for the April 2018 low in the 89.20 / 25 band.

The pessimism surrounding the dollar remains strong and solid in early 2021, although the US dollar DXY index managed to rebound from the new two-year low around 89.40 (Jan 4).

The outlook for the dollar remains bearish and thus more losses remain on the charts. That said, a solid break from the lows in the 89.40 region should lead to a potential visit to the April 2018 low at 89.22.

The downward pressure is expected to ease a bit from a break from the 2020-2021 resistance line, around 91.80 today.

Long-term, as long as the DXY trades below the 200-day SMA today at 94.90, the negative view is expected to prevail.

DXY day chart

DXY

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