- The dollar index bounced this week after some sustained weakness recently.
- The price of the US dollar basket is now trading 0.35% higher on Friday as stock markets continue to sell-off.
Dollar Index weekly chart
The DXY found support today at the 200 Simple Moving Average (SMA) after some sustained weakness in recent weeks. The price could not break the 100.00 level and manage to rally above the psychological zone for a sustained period of time.
If the candle closes anywhere near the current levels for the week it will be a hammer which is traditionally bullish. On the weekly timeframe, the market is still making higher lows and higher highs so the trend is still higher and this recent move lower could just be a retracement.
The technical indicators are still mixed. The MACD histogram is bearish and the signal lines look to be following its lead. The Relative Strength Index has just dipped under the 50 line and if history is anything to go by the signal line can stay at the mid zone for a very long period of time.
The trajectory of the DXY will depend on the potential increase of the “R number” in the US in terms of the COVID-19 pandemic. At the moment there is still a strong demand for the safe-haven currency as case number are still on the increase.