The dollar index has stretched below the 95.00 key-level, extending its downleg that started on January 3, when it touched a multi-year high of 103.81.
Looking at the technical indicators, the index is likely to remain bearish but there is a possibility of an upside reversal in the near-term horizon. The RSI has been hovering in bearish territory since March 14 and attempted to break above 50 three times since then but struggled to hold above it. Currently, the indicator is showing that the index is oversold as it has recently dropped below 30, hinting that a trend reversal might take place. Additional evidence of the negative bias comes from the MACD, which continues trending below zero.
Should the index head down, a support to downside movements is expected to be first found around the psychological level of 94.00, where the lower line of the descending channel is also located. Then, if the price drops below that area, the next support could be provided by 93.00, which was also tested in the past. Note that if the price manages to fall below 91.87, this could signal the start of a longer-term downtrend.
On the upside, the zone around the Kinjun-sen point of 95.87 would act as a strong resistance as the middle-line of the channel is also passing through that area. Any increases from that point would bring into view the 96.64 level, which lies on the 50-day exponential moving average line (EMA), followed by the key level of 98.00. The latter is notable as it is settled inside the Ichimoku cloud and near the upper line of the channel.
Concerning the outlook in the medium-term, the index is bearish as it has been recording lower tops and lower bottoms since January, confirmed by the recent bearish crossover between the 50-day EMA and 200-day EMA.
