Dollar Index Technical Analysis: H&S breakdown seen, rising T-yields could cap downside

The daily chart of the dollar index (DXY) shows a head-and-shoulders breakdown - a bearish reversal pattern- which indicates the rally from the February low of 88.25 has likely ended and the bears are back in a commanding position.
However, the breakdown could be a trap as the greenback tends to perform well in the fourth quarter.
More importantly, the 10-year treasury yield printed a four-month high of 3.06 percent and could revisit yearly high of 3.13 percent, now that it has found acceptance above key resistance of 3.02 percent (July high).

Omkar Godbole FXStreet Contributor

Daily chart

Spot Rate: 94.55

Daily High: 94.69

Daily Low: 94.53

Trend: Cautiously bearish

Resistance

R1: 94.66 (neckline hurdle)

R2: 95.00 (Sept. 14 high)

R3: 95.50-95.60 (multiple daily highs)

Support

S1: 94.30 (previous day's low)

S2: 94.00 (psychological support)

S3: 93.71 (July 9 low)

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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