US Dollar Index retreats from a new year-to-date high around 95.40, bull's eye 96.00

The US Dollar Index, also known as DXY, which tracks the greenback’s performance against a basket of its peers, advances 0.34%, sitting at 95.42 during the New York session at the time of writing. Since last Wednesday, the DXY had gained over 1.55% when it traded as low as 94.00, until Monday’s session when it reached a year-to-date high around 95.45.

Earlier in the Asian session, the DXY hovered around the psychological 95.00 price level, undermined by falling US bond yields. Further, on Friday of the last week, the University of Michigan Consumer Sentiment Index dropped to a 10-year low as consumers expressed concerns about elevated prices. This would exert pressure on the Federal Reserve, which in fact, in this week will begin the reduction of its QE pandemic program by $15 billion, which would end by June 2022.

As of writing, US bond yields are rising. The 10-year Treasury yield rises three and a half basis points, sitting at 1.621%, acting as a tailwind for the buck.

US Dollar Index (DXY) Price Forecast: Technical outlook

The daily chart depicts the DXY approaching Pitchfork’s indicator’s central line around the 95.50-60 region. The daily moving averages (DMA’s) remain well below the current price action, with an upslope, supporting the upward bias. Also, the Relative Strength Index (RSI) at 68 is above the 50-midline, aims higher, suggesting that DXY has another leg-up before reaching overbought conditions

A break above the mid-line of Pitchfork’s channel would expose 96.00 as its first resistance area. A clear breach of the latter would expose June 30, 2020, high at 97.80, followed by May 25, 2020, high at 99.97.