Dollar Index: Above 200-day MA, but stuck at the long-term descending trend

The dollar index (DXY) closed above the 200-day moving average in a convincing manner yesterday.
However, long-term bull breakout remains elusive.
Fed may signal June rate hike today, could yield another leg higher in the USD.

Omkar Godbole FXStreet Contributor

The dollar index (DXY), which tracks the value of the greenback against the basket of currencies, seems to have found acceptance above the 200-day moving average, still, it is too early to call a long-term bullish reversal.

Moreover, the trendline sloping downwards from the Jan. 2017 high and March 2017, representing the long-term bear market, is still intact.

The DXY's first attempt to scale the trendline failed yesterday. However, the probability that Fed will hike rates three more times this year has almost doubled in the last four weeks or so.

Further, the central bank will likely drop a hint of a June rate hike today, if it is serious about raising rates three more times this year. So, the DXY is still on the hunt for a big move above the long-term descending trendline. As of writing, it is trading at 92.40.

Dollar Index Technical Levels

A close above 92.65 (descending trendline) would confirm the long-term bull reversal and open up upside towards 94.14 (August 2017 high) and 94.22 (Dec. 12 high). On the downside, a move under the 200-day MA of 91.97 could yield a deeper pullback to 91.46 (Sept. 20 low) and 91.00 (psychological level).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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