The US Dollar crashed to a 2-year low as multiple fundamentals pummelled the greenback. A flight away from the greenback intensified after the US flag was lowered in its now-former consulate in Chengdu, as Chinese security forces quickly took over the building in the latest leg of the US-China tensions.
The drop in the greenback has sent the prices of gold and silver to record highs, as the USD Index plunged steeply on Monday to mark a 7-day bearish streak.
China is not the only diplomatic problem for the US. It would seem Russia has joined the fray as well. The Russian defence ministry said one of its Su-27 fighter jets had to confront a US P-8 Poseidon spy plane that flew over the Black Sea, very close to the Russian border. This latest incident is coming barely a month after President Trump received briefings of alleged incentive payments to the Taliban by Russia to kill US soldiers in Afghanistan. These new international escalations are not helping the cause of the coronavirus-battered greenback.
The USD Index currently trades at 93.67 with bears entirely in control of affairs.
Technical Outlook for DXY
The USD Index has by today’s move, breached the 93.80 price support, but confirmation of a breakdown is awaited. If tomorrow’s candle closes below this support, the breakdown is confirmed, and 93.17 becomes the new downside target. The lows of 27 November 2017 and 7 May 2018, which are located at 92.50, could become the latest target if 93.17 fails to stop the rot on the DXY.
On the flip side, failure to confirm the breakdown of 93.80 could allow for a temporary pullback to 94.62 and possibly 95.03, with further upside targets at 95.19 and 95.72 clamouring for recognition from any possible factor that could boost the US Dollar. Presently, the bias is bearish, and rallies could present new opportunities for renewed selling, until the sentiment on the USD changes.
DXY Daily Chart