Dollar Index Weakens Below August Lows

The US Dollar Index (DXY) has weakened after dropping below its recovering channel from August lows. On the 2-hour chart, the index is currently trading at 99.23 and has lost significant ground at key levels.

A breakdown of the DXY's structure shows how quickly it was rejected at the 99.80-99.86 range. The downward pressure on the index is evident in its loss of 99.62, 99.48, and 99.35, indicating a weakening of the bullish recovery.

The first area to watch is the downwards support zone beginning at 99.12, with potential further losses exposing levels at 98.90, 98.72, and 98.56 if broken below. In contrast, resistance begins forming around the previous support zone of 99.35-99.48, including 99.62.

The Relative Strength Index (RSI) has dropped into oversold territory, suggesting a possible bounce in the index; however, the author believes that DXY will drop further when trading below the 99.48 range.