Dollar Index: Loss of upward momentum

• The dollar index (DXY) has retraced 23.6 percent Fibonacci retracement of the recent rally as treasury yields sag.
• Short-term momentum studies are beginning to roll over in favor of the bears.
• DXY created a doji candle with long upper shadow last week, signaling bullish exhaustion.

The dollar rally seems to have run its course, the action in the treasury yields and the technical studies indicate.

As of writing, the dollar index, which tracks the value of the greenback against majors, is trading at 92.43 - 23.6 percent Fibonacci retracement of the rally from the April 17 low to the May 9 high.

The pullback could be associated with the US 10-year treasury yield's inability to rise above the 3 percent mark in a convincing manner. At press time, the yield is changing hands at 2.97 percent, having failed at least twice in the last two weeks to hold on to gains above 3 percent.

Meanwhile, the DXY technical studies also indicate a loss of bullish momentum. For instance, the 5 and 10-day moving averages (MA) have started to tilt lower in favor of the bears. Further, the DXY created a doji candle with a long upper shadow at the descending 50-week MA, signaling bullish exhaustion.

So, the further pullback cannot be ruled out. That said, the primary trend still remains bullish as indicated by the upward sloping (bullish) 5-week MA and 10-week MA.

Dollar Index Technical Levels

Acceptance below 92.43 (23.6% Fib R) would open up downside towards 91.96 (200-day MA) and 91.82 (38.2% Fib R). Meanwhile, resistance is lined up at 92.68 (10-day MA), 93.00 (psychological hurdle) and 93.42 (recent high).