US dollar index: bearish MACD crossover

The dollar index (DXY) fell to 106.3 (-0.7% on the day), its lowest level since July 6th, as traders reduced expectations for a full percentage point rate rise by the Federal Reserve next week and risk appetite returned.
Fed interest rate futures now price in a 75-basis-point-hike in the next FOMC meeting with a 67% probability, according to the latest CME Group’s Fed watch tool.

From a technical standpoint, the dollar's momentum is waning after three consecutive sessions in the red, with the 14-day RSI sliding drastically from an overbought zone to considerably lower levels (55).
A bearish MACD crossover has formed on the DXY, which could pave the way for the continuation of the short-term bearish trend, but without affecting the dominant positive trend in 2022.

The breakdown of the next support at 106.1 (July 6’s lows) might lead to a test of 105.5 (June 15’s highs).


Idea written by Piero Cingari, forex and commodities analyst at Capital.com