Dollar Index Tests Critical Support Level Amid Weakening Momentum

The US Dollar Index (DXY) is facing a critical test as it presses against a key support level, historically known as the 0.618 Fibonacci arc.

This technical indicator has acted as a pivot for medium-term trends and has held on multiple tests over the past three months.

However, each test has seen decreasing buying momentum, as reflected in lower lows on the Relative Strength Index (RSI) and declining trading volumes. This divergence suggests that the support arc may be losing its strength.

If the DXY closes below this level on a daily basis, the next major target is 98.55, which corresponds to a 61.8% retracement of the entire uptrend from the 2021 low to the 2022 high.