The US Dollar Index (DXY) endured a rapid fall during the week which sent it towards 97.56, the lowest level reached since May 16. The DXY had rallied to trade at about 98.37 during the week with the peak coming in early on Thursday before tumbling to the current level of 97.60.
The USDX measures the performance of the US Dollar against a basket of six rival currencies and the decline is well illustrated when looking at how the major pairs faired during the week.
The US Dollar Index (DXY) Fundamentals Overview
From a fundamental perspective, the USDX was negatively affected by the reported decline in US Treasury Yields, which fell to the lowest level since 2017. This also affected the performance of US stocks towards the end of the week, which also weighed on the Dollar Index.
In addition, with trade tensions with China intensifying, greenback continues to face risk-off trading pressure and this also weighs on the DXY. And on Friday, the non-durable goods data missed expectations coming in at -2.5% compared to -2% forecast, which further dimmed any chances of a late recovery.
The US Dollar Index (DXY) Technical Analysis (the 60-min Chart)
Technically, the US Dollar Index appears to experience a bearish bias based on the XABCD pattern above. This suggests that any rebound witnessed in the next few days might only be short-term. For now, it looks like the bears have control.
Therefore, the bears will be targeting profits at around 97.44 in the short-term. There are several intermediate opportunities to follow before the long-term target of 96.81 becomes active.
On the other hand, the bulls will target profits at 97.72 in the short-term while a long-term target of 98.32 is well within reach should the DXY fashion a major rebound.
The US Dollar Index (DXY) Technical Analysis (the Daily Chart)
In the daily chart, the DXY appears to be trading within an ascending channel. And since the start of the year, it has edged closer to the base of that channel but maintained a bullish outlook.
Therefore, the bulls will claim control in the long-term, but the bears will look to pounce on all intermediate pullbacks. Several opportunities will be created as demonstrated in the chart above.
In summary, the US Dollar Index has made a sharp decline this week, ending what has been a bullish run. In a wider perspective, that decline appears to have fallen well in shape as the USDX continues to maintain a bullish long-term outlook.