Watch These U.S. Dollar Index Price Levels After Recent Drop to 3-Year Low

The U.S. dollar index (DXY) held steady on Monday after hitting a three-year low last week, as the greenback is on track for its worst first half since 2002.

The index has faced downward pressure this year as investors have raised concerns over the outlook for the U.S. economy and America’s role within the global financial system amid Washington’s unpredictable tariff policies.

The U.S. dollar index, which measures the performance of the greenback against a basket of foreign currencies, has has lost nearly 10% of its value since the start of the year. The index fell less than 0.1% on Monday to around 98.15, after dropping as low as 97.60 last Thursday, its lowest level since February 2022.

Below, we take a closer look at the U.S. dollar index weekly chart and use technical analysis to identify crucial levels that investors will likely be watching.

Bearish Flag Pattern Breakdown

After breaking down below a descending triangle in early April, the U.S. dollar index formed a bearish flag pattern, indicating a continuation of its strong downtrend.

Indeed, selling resumed after the index broke down from the flag late last month, possibly setting the stage for further downside. However, while the relative strength index confirms bearish price momentum, it sits just above oversold levels, an area that has coincided with major upswings on several occasions.

Let’s identify two crucial support levels on the U.S. dollar index to watch and also point out overhead areas worth monitoring during future recovery efforts.

Crucial Support Levels to Watch

Further selling could see a drop toward 95. This area would likely provide support near a trendline that links a range of prominent peaks and troughs on the chart between November 2017 and January 2022.

A decisive close below this level could trigger a steeper decline to around 90. Those who trade the index may look for buying opportunities near major lows that formed on the chart in the first half of 2021, which also closely correspond with a consolidation period positioned just above the February 2018 trough.

Interestingly, this area also roughly aligns with a projected bars pattern target that takes the index’s strong downtrend that preceded the bearish flag and repositions it from the pattern’s breakdown point, providing clues as to how a downside continuation move may play out.

Overhead Areas Worth Monitoring

During upswings, investors should initially monitor the 101 level. This area on the chart would likely provide significant overhead resistance near the descending triangle’s lower trendline and a series of highs situated slightly below the March 2020 peak.

Finally, a close above this level could see the U.S. dollar index climb toward 107, an area the greenback may experience selling pressure on the chart near prominent peaks in October 2023 and November last year.

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As of the date this article was written, the author does not own any of the above securities.