Dollar Index Tests Key Support Near 98.80 After Bearish Breakdown

The U.S. Dollar Index (DXY) is testing a critical support level after a technical breakdown confirmed a bearish pattern, placing the currency gauge under significant pressure. As of Monday, the index was trading around 98.89, with technical analysis from Investing.com indicating that sellers remain firmly in control of the trend.

Technical Breakdown Confirmed

According to the analysis, the Dollar Index has broken down from a "bear flag" pattern, a chart formation that typically signals the continuation of an existing downtrend. The price is currently trading below its major 20, 50, and 200-period moving averages, which reinforces the negative outlook for the index.

A failed relief rally gave way to the recent decline, cementing a formidable resistance zone between 99.19 and 99.28. This area represents a confluence of technical barriers, including moving averages and the Ichimoku cloud indicator, that could stifle any potential bounces.

Key Levels to Watch

For investors and traders monitoring the index, the immediate area of concern is the local support level at 98.80. A decisive and sustained break below this mark could open the door to further declines toward the next significant zones.

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Key levels identified in the analysis include:

• Immediate Support: 98.80
• Secondary Support: 98.47 (previous swing low)
• Major Resistance: 99.20 – 99.35 (a cluster of moving averages and other technical indicators)

Market Momentum and Outlook

The bearish sentiment is further supported by several momentum indicators. The Moving Average Convergence Divergence (MACD) indicator shows building downward momentum, signaling that the downtrend may be accelerating.

Meanwhile, the Relative Strength Index (RSI) is at 35.17. While this reading is approaching oversold territory (typically below 30), it does not yet signal an imminent reversal. This suggests sellers could push the index lower before momentum becomes exhausted, and the prevailing technical view is that the path of least resistance remains to the downside.