- Rising yields favor further rally in the dollar index (DXY).
- However, the daily chart shows oversold conditions.
The dollar index, which tracks the value of the greenback against majors, is flat-lined around 93.50 in Asia, even though the 10-year treasury yield hit fresh 7-year high of 3.13 percent.
The 14-day relative strength index shows overbought conditions and adds credence to bullish exhaustion as indicated by Wednesday’s doji candle. So, a pullback cannot be ruled out.
That said, the dips will likely be short-lived as the short-term moving averages (5, 10) continue to rise in the USD-positive manner. Further, the 10-year yield looks set to test 3.5 percent in the near-term.
Also, the news is doing the rounds that China has offered Trump administration a $200 billion reduction in its annual trade surplus with the US. The easing US-China trade tensions also favor a further upside in the greenback.
Dollar Index Technical Levels
A close above 93.63 (Wed’s Doji candle high) would expose resistance at 94.00 (October high) and 94.22 (December high).
On the downside, a close below 10-day MA of 93.04 could yield consolidation and may allow a pullback to92.50 (Nov. 27 low) and 92.24 (May 14 low).