The US Dollar Index (DXY) has been caught in a tight range between the 100 level and its 2024 low after an 11% drop from January to April. Although the dollar recovered about 4% over three weeks, it remains unclear if this rebound has ended or if further declines lie ahead.
This week, the dollar slipped below its 200-day moving average and fell under the 100 mark. However, it found support at the 2024 low, ending a three-day losing streak on Thursday.
The daily Relative Strength Index (RSI) also bounced back from oversold levels, suggesting some room for a short-term rise. A move back above 100 could push the dollar toward resistance near 100.50. Still, a clear break above 100 is needed to confirm this upside.
The near-term outlook favors a modest dollar increase and a retest of trend resistance. Yet, there is also a chance the dollar could fall below 99 next week if it fails to surpass Thursday’s high.
For the euro against the dollar (EUR/USD), a drop below yesterday’s low would be necessary for the dollar to climb above 100 on the DXY. EUR/USD ended a three-day rally with a bearish engulfing candle and its RSI fell from overbought territory, indicating the pair may be stretched.
Support is expected near 1.12 and the 2024 high at 1.1214. Without major news from the G7 meetings, large moves in either the dollar index or EUR/USD seem unlikely this weekend. The euro might dip further before finding support around 1.12 and then resume gains next week.
The US dollar shows stronger potential against the Japanese yen (USD/JPY) than the euro. After a recent dip, USD/JPY found support near 142.7 and 142.36, forming its first bullish candle in eight sessions. The RSI indicates rising momentum, while a break above 144.40 could target resistance zones around 145 and 146.38.
Similarly, GBP/JPY appears bullish. The pair held above its 200-day simple moving average and 50-day exponential moving average, with positive momentum indicated by the RSI. As long as prices stay above Thursday’s low, bulls may aim for the cycle highs near 196.
In summary, the US dollar remains in a delicate position, supported at key lows but facing resistance near 100. Market watchers should monitor whether the dollar breaks decisively above or below these levels, as this will shape near-term trends across major currency pairs.
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