The DXY dollar index is preparing for a downward movement to the 101-102 area

The DXY dollar index is preparing for a downward movement to the 101-102 area. Duration until the end of August - beginning of September. Let us recall that the Index has an inverse correlation with risky asset markets, including cryptocurrency.

At the same time, the crypto market, due to its smaller capitalization, is quite capable of showing growth against the growing DXY. BUT it can fall on a falling DXY only during “black swans”, as happened during the#FTXscam in November 2022.

The last time we analyzed#DXYwas back on June 18 at the level of 105.260. And then we gave a forecast of decline. The forecast worked out, the Index is at 104.063.

Now we are again forecasting a decline, and this forecast is even more confident. On July 5, the index broke through the EMA of the 50 day TF and showed an unsuccessful attempt to return above on July 9-10. Then, on July 11, it broke through the trend support that has been going on since December 2023. And yesterday, July 30, it showed another unsuccessful attempt to return above the EMA of the 50 day TF, and even with a correction signal from the trend reversal indicator. 

Also, which is very important, there is a test of the breakdown of the ascending trend support from May 2021 (!) (indicated by a dotted line). This is support for the entire three-year DXY uptrend. Fixing under it is an important signal for the growth of volatile assets.

The weekly TF maintains a downward candlestick structure, which may last until the end of August. On the monthly TF, the structure of the candles starting in July may turn downward, but to be more confident in this, the monthly candle needs to be closed below 103.946. Let's see if today's meeting of the US Federal Reserve and Powell's speech will help with this. 

So far, from the DXY chart we conclude that they will be dovish and could bring bullish momentum to the markets. And according to the Index, accordingly, on the contrary, there is a correction impulse.

Our expectations for August for the Index are a decline in the first week of August, then a rebound without consolidation above the volume level of 104.748 and then a decline to the area of ​​the volume level of 101.240. Support targets are EMA 200 of the weekly TF (currently at 101.585) and EMA 50 of the monthly TF (currently 101.330).

Accordingly, August should be positive for the markets. Next you will need to look at the reaction of tests of these supports.