I’ve written about the US Dollar Index (DXY) 102.50/60 area a few times this month.
It’s a key horizontal, the golden pocket, and the bottom of a short-term descending channel.
We saw the DXY defend 102.50 last week with a bullish pin bar on Thursday.
Bulls followed through on Friday, but the dollar bull case has faltered a bit since then.
However, the dollar index is still holding above that 102.50 support region, and last week’s low is untarnished.
Additionally, the DXY is attempting to break out of an hourly trend line from March 15th.
There are three touches off of this descending trend line since the 15th, and today’s session is attempting a breakout.
So far, we have a 4-hour close above this trend line, which could open up the DXY 103.50 yearly open.
That will be a significant test for DXY bulls, requiring a daily close above to flip it back to support.
Alternatively, a move below last week’s 101.92 low would signal further weakness toward 101.25.
I’m still cautiously bullish on the dollar, given that it’s holding above 102.50 and starting to break out today.
The equity market also looks heavy, which could lead to dollar strength.
That said, I won’t turn aggressively bullish on the DXY unless it reclaims 103.50 and 105.60.
