US Dollar Index Price Analysis: DXY bears approach 105.40 after the biggest monthly fall in 12 years

US Dollar Index (DXY) bears keep the reins around 105.90 during early Thursday, taking a breather after posting the biggest monthly slump since September 2010.

The Greenback’s gauge versus the six major currencies reversed from the 21-Day Moving Average (DMA) the previous day to print the latest losses. The bearish move also gained clues from sluggish Moving Average Convergence and Divergence (MACD) and downbeat Relative Strength Index (RSI) line, placed at 14, not oversold.

With these conditions met, the DXY sellers are all set to approach an upward-sloping support line from early August, around 105.40.

However, the likely oversold RSI conditions around 105.40 support might stop the US Dollar bears around then, if not then the monthly low near 105.30 and the 105.00 round figure may challenge the quote’s further downside. Also acting as a downside filter is August month’s bottom surrounding 104.65.

Alternatively, the 61.8% Fibonacci retracement level, also known as the golden ratio, of the DXY’s May-September upside, near 106.45, restricts nearby upside move.

Following that, the 21-DMA level of 106.52 and the latest swing high near 107.20 could test the DXY bulls.

It’s worth noting, however, that the US Dollar Index remains on the bear’s radar unless crossing July’s high near 109.30. That said, the 50% Fibonacci retracement level surrounding 108.00 acts as an extra filter to the north.

US Dollar Index: Daily chart

Trend: Limited downside expected