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Oversold Indicators May Trigger a Market Rebound
Forex
Economic
Summary:
The U.S. Dollar Index (USDX) extended its decline on Tuesday, touching approximately 98.15, a level not seen since March 2022. The dollar's broad-based weakness was fueled by escalating market concerns regarding U.S. trade policies and the Federal Reserve's independence.
Buy
CLOSEDUSDX
End Time
98.540
Entry Price
102.000
TP
97.300
SL
100.190 -0.270 -0.27%
650
Points
Profit
97.300
SL
99.190
CLOSING
98.540
Entry Price
102.000
TP
Fundamentals
The USDX has experienced a significant decline since the escalation of global trade tensions stemming from President Trump's tariff war. The USDX has exhibited a clear bearish sequence since peaking on September 26, 2022.
The primary driver behind the dollar's weakness is the persistent public criticism of the Federal Reserve by former President Trump, which has eroded perceptions of the Fed's independence and undermined investor confidence in U.S. policy credibility.
Overnight, the USDX breached a critical support level, suggesting a potential acceleration of the downtrend. This sell-off reflects an intensification of investor selling pressure on U.S. assets as market sentiment continues to deteriorate.
Furthermore, the weaponization of the dollar, including its use to coerce other nations to abandon dollar-denominated settlements and its interference in trade through the leveraging of its dominant position, is compelling other countries to gradually move away from using the dollar for international transactions, opting for alternative currencies.
As the U.S.'s share in the global economy diminishes over time, the dollar's status as the world's primary reserve currency is increasingly under threat, a trend that appears irreversible.
Technical Analysis
Technically, the quote at 99.57 (2023 low) confirms the resumption of the downtrend from 114.77 (2022 high). The short-term outlook remains bearish as long as the 101.91 resistance level holds. The next target is the 100% Fibonacci retracement of 99.57 - 114.77 at 94.97.
For the USDX, the support range near the 95.00 psychological level is particularly important, as it coincides with the long-term ascending channel support dating back to 2011.
A decisive break below the 95.00 level in the future could initially trigger a further acceleration of the medium-term decline to around 94.42. (This level may see an equivalent rebound after the end of the AB=CD pattern). More importantly, this could also signal the end of the broader uptrend that began from the 2008 low of 70.69.
Such a structural collapse would lead to sustained weakness, with a medium-term downside target in the 89.20-90.00 range, and the risk of entering a new long-term downtrend in the coming years.
Trading Recommendations
Trading Direction: Buy
Entry Price: 98.30
Target Price: 102.00
Stop Loss: 97.30
Valid Until: May 7, 2025 23:55:00
Support: 98.00, 97.95, 97.69
Resistance: 99.21, 100.30, 101.27
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