As we analyze the current state of the dollar in the Forex market, it is evident that the monthly scale has the potential to explore deeper waters. The 200-day SMA stands out as a crucial downside support target around 104.39. Breaking below this level could unearth further support at 103.62. The Relative Strength Index (RSI) has been unable to gain acceptance above the 50.00 centreline, indicating a bearish momentum. Although, it is important to note that the RSI has maintained a position above the 50.00 centreline since 2022 on the monthly chart.
Daily Analysis
On the daily timeframe, Friday saw a considerable decrease after encountering resistance at 105.04 and the 50-day SMA at 104.98. The chart shows early signs of a downtrend with a series of lower lows and lower highs. Dollar bears seem to be in control, at least until the 200-day SMA where a crucial support test awaits. Earlier reactions observed in mid-May could provide insights into potential price movements.
Short-term Perspective
Short-term action on the H1 chart revealed a market sandwiched between ascending support at 104.39 and trendline support-turned resistance at 104.08. Resistance levels to watch include 104.84 and 105.04, while a moderate Fibonacci cluster near 104.47 could act as a point of interest just above the 200-day SMA. With the current downtrend, limited support on the monthly chart, and resistance at 105.04 on the daily timeframe, it is evident that sellers are dominating the market. However, potential price movements on the H1 timeframe could see a defense of breached trendline support and a push towards the Fibonacci cluster at 104.47.
The dollar remains under pressure in the Forex market with bearish momentum prevailing across different timeframes. The upcoming test at the 200-day SMA will be crucial in determining the future direction of the currency. Traders should pay close attention to key support and resistance levels to navigate through the current market conditions effectively.