Since the start of the week, it has depreciated against most G10 currencies excluding the Canadian Dollar and British Pound.
Weakening US Treasury yields weighed on the greenback while rallying equity markets hit demand for the safe-haven currency.
Given how the Dollar Index (DXY) is trading below the 92.50 level this morning, could this signal further downside over the next few days?
Fundamentals: Fed meeting minutes
Much attention will be directed towards the minutes of the last FOMC meeting which will be released at 18:00 GMT Wednesday. Investors will closely scrutinize the minutes for fresh clues about what policymakers were thinking about inflation and the timeline for interest rate increases. Given how Federal Reserve policymakers were optimistic about the U.S. economic outlook during the March meeting, the minutes are likely to echo a similar tone. However, doves are expected to remain in the vicinity - especially after a majority of policymakers indicated that interest rates will not be raised until 2024.
Back to the technicals…
The mighty dollar is not looking so mighty on the daily charts. Yesterday’s close below the 92.50 level may encourage a decline towards 91.70 and 91.35, respectively. Despite the recent losses, bulls still have a chance to fight back. The MACD is trading above 0 while prices are marginally above the 20 Simple Moving Average. A solid push back above 92.50 may open the doors towards 93.00 and 93.47.
Weekly chart signals weakness
Things started going downhill for the DXY after prices failed to break above the 93.47 level last week. Although the candlesticks are currently in a weekly bullish trend, the MACD remains below 0. If the downside momentum results in a breach below the 91.50 support, this could signal further a selloff towards 89.00. For bulls to jump back into the game on the weekly charts, a solid weekly close above 94.75 needs to be achieved.
Same story on the monthly
The trend remains bearish on the monthly charts. There have been consistently lower lows and lower highs while the MACD trades below 0. A solid monthly close below 92.00 may invite a decline towards 90.60, 89.20 and 88.00, respectively. If 92.00 proves to be reliable resistance on the monthly timeframe, a rebound towards 94.00 and 94.80 could be on the cards.
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