- Dollar index (DXY) clocked a 5-month high of 93.86 in Asia.
- Eyes 94.20 – 38.2 percent Fibonacci retracement of Jan 2017 – Feb. 2018 sell-off.
The Dollar Index (DXY), which tracks the value of the greenback against majors, rose to 93.86 in Asia – the highest level since Dec. 18, largely due to the drop in the common currency.
The EUR/USD pair also dropped to a five-month low of 1.1744 in Asia. Italian political uncertainty and the resulting widening of the Italian-German yield spread seen last week seems to have weighed over the EUR.
Further, the greenback may have found bids on the easing of US-China trade tensions.both nations have decided to put the trade war on ‘hold’ and draft a framework to address trade imbalances in the future.
The DXY’s ascent may continue, however, the resistance at 94.20 – 38.2 percent Fibonacci retracement – may hold as the 10-year treasury yield created a bearish outside-day candle on Friday, signaling bullish exhaustion.
Dollar Index Technical Levels
The 14-day relative strength index (RSI) shows overbought conditions, hence a pullback cannot be ruled out. The immediate support is seen at 93.42 (May 9 high), 93.17 (ascending 10-day moving average). On the higher side, resistance is noted at 94.02 (Dec. 15 high) and 94.22 (Dec. 12 high).