The US Dollar Index rallied towards the 103.00 level last week after staging a confirmed technical breakout above the 2019 trading high.
US Dollar Index technical analysis shows that bearish MACD price divergence on the lower time frames is warning that a substantial downside correction could occur.
US Dollar Index medium-term price trend
The US Dollar index rallied to its highest level in over three years last week, with price moving within touching distance of December 2016 trading high.
Traders looked past the rate cuts from the Federal Reserve, and the announcement of a massive QE stimulus from the US central bank.
US Dollar Index technical analysis over the medium term shows that failure to surpass the December 2016 high, around the 103.85 level, may see the greenback testing lower.
Failure to form a confirmed bullish reversal pattern is a negative over the medium term for the greenback. Until a breakout above the 103.85 level occurs, a bearish double-top is in play.
Looking at the daily chart, key technical support for the US dollar index is found at the 99.90 and 98.80 levels.
US Dollar Index short-term price trend
DXY analysis shows that the index has a bullish short-term bias while the price trades above the 98.50 level.
The four-hour time frame shows that a bearish MACD price divergence has formed during the latest advance in the greenback.
With this in mind, the bearish MACD price divergence extends down towards the 96.00 level, which implies a major reversal for the US dollar index.
Weakness below the 99.90 should accelerate technical selling towards the 98.50 support level.
US Dollar Index technical summary
DXY analysis shows that the index could reverse sharply if sellers move price below the 99.90 level. Bearish MACD divergence is warning of a decline back towards the 96.00 level.