US Dollar Index Technical Analysis: Risk remains for another leg lower

The US Dollar Index (DXY) is having a difficult Tuesday where a handful of currencies are appreciating against the US Dollar, with the Japanese Yen leading the charge. This has pushed the DXY below the 200-day Simple Moving Average (SMA) at 103.73. The Durable Goods print this Tuesday could be enough of a catalyst to push the DXY all the way down to test 103.00.

To the upside, the 100-day Simple Moving Average (SMA) near 104.02 is the first level to watch as it is a support that has been turned into a resistance. Should the US Dollar be able to cross 104.60, 105.12 is the next key level to keep an eye on. One step beyond there comes 105.88, the high from November 2023. Ultimately, 107.20 – the high of 2023 – could even come back into scope, but that would be when markets reprice the timing of a Fed rate cut again, possibly delaying it to the last quarter of 2024. 

Looking down, the 200-day Simple Moving Average at 103.73 was broken on Thursday and sees more US Dollar bears flock in to trade the break. The 200-day SMA should not let go that easily, so a small retreat back to that level could be more than granted. Ultimately, it will lose its force with the ongoing selling pressure and could fall to 103.16, the 55-day SMA before testing 103.00 as a level.