At 15:30 GMT, DXY is trading 98.654, up 0.157 or +0.16%.
The moving averages show a mixed to lower picture with DXY clearly on the weak side of the 50-day MA at 98.926, but straddling the 200-day MA at 98.532. The tightness of the gap between the two suggests impending volatility, but the immediate direction is unknown.
Since mid-April, DXY has shown strong respect to the long-term retracement zone at 98.097 to 97.496. In fact, the low for the month at 97.632 fell inside this zone. Traders have also showed respect for the short-term retracement zone at 99.138 to 99.493.
Since DXY is currently trading in the middle of the retracement zones, our focus is going to be on the moving averages, which appear to have the same characteristics as pivot. I think a sustained move over the 50-day MA at 98.925 will create upside momentum and a move over 99.493 will trigger an acceleration to the upside. At the same time, I see a bearish tone developing under the 200-day MA at 98.532 with 98.097 the first target and 97.496 the major support and potential trigger point for an acceleration to the downside.
