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  • Dollar Index is looking south with a key indicator reporting the strongest bearish bias in six months.  
  • The 200-week average support at 96.01 could be put to test.  

The path of least resistance for the dollar index (DXY) is to the downside, according to a key technical indicator.  

The weekly MACD histogram, an indicator used to identify trend changes and gauge trend strength, is currently hovering at -0.19 – the lowest since June. A reading below zero indicates bearish conditions.  

The indicator, therefore, is reporting the strongest bearish bias in six months. The weekly relative strength index (RSI) is also hovering in bearish territory below 50.

Meanwhile, the daily chart is reporting a bearish lower high, lower low  setup.

The DXY looks set to test the 200-week average, currently at 96.01. The long-term average acted as strong support three times in the first six months of this year.  

A weekly close above 97.82 (last week’s high) is needed to confirm a bullish reversal.  

Weekly chart

Trend: Bearish

Technical levels