DXY: Fake breakout catching out the sellers at the highs
It seems for years that the dollar index has been struggling to break through our overhead resistance of 97.50 but, this eventually broke last week due to Powell's wording regarding the rate cut as an “Insurance cut”.
Now the question is whether or not it was a “False break”? The weekly and daily timeframes have come under some heavy selling pressure partly down to the fact that Trump announced a new round of tariffs on China. The new tariffs are to come into effect on the 1st September, there is a chance that these new tariffs do not come in, but there is no hope of that in my personal opinion.
The weekly chart below shows us the negative candlestick formation and rejection off of our 98 handle. This is a very negative candlestick formation and would suggest further downside momentum for the DXY. The trend-line supporting price from the start of the year has been keeping the DXY buoyant and we look set to re-test this in the coming days/week max. Our next daily support level is at 97.50 and we are fast approaching this, we may look to stall around this before re-testing the longer-term trend line. The trend-line will be the barometer of bullish/bearish in my opinion, if we hold we can look to push even further higher or if this is broken it could be a free fall to 95.50.