DXY Tumbles Under Bearish Control as 200-Day SMA Cements Resistance

The US Dollar Index (DXY) continues to face selling pressure as it remains entrenched in a bearish technical structure. The index's repeated failure to break above its 200-day simple moving average (SMA) reinforces the bearish bias, with the SMA acting as a formidable ceiling for any recovery attempts.

The 200-day SMA has been a key resistance level for the DXY, rejecting upside moves and capping rallies since the index turned lower. This long-term trend indicator often watched by institutional traders is now hovering in neutral-to-weak territory, offering no clear bullish divergence according to momentum indicators such as the Relative Strength Index (RSI) and moving average convergence divergence (MACD).

The dollar's weakness is largely tied to shifting expectations around Federal Reserve policy. With inflation showing signs of cooling, markets have priced in a more dovish path for interest rates, reducing the yield advantage that previously supported the greenback.