Dollar Index – Monthly Analysis
In this monthly analysis, we apply our multi-frame methodology to assess what the dollar’s recent moves mean, evaluate the pressure building beneath the surface, and outline the scenarios most likely to define its next major move.
CANDLES
The Dollar Index closed May with a neutral-bullish candle. It neutralized the immediate threat of bearish confirmation and recovered just enough to close above the 8 EMA, which now acts as support.
During the second half of May, DXY moved mostly sideways, likely building a solid foundation for the next upward move. The daily and weekly trends remain bullish.
Overall, DXY is neutral in the short and mid term, while the long-term outlook slightly leans bullish. I continue to monitor the potential Double Bottom breakout, which is developing simultaneously on two different frames, daily and monthly.
In the April monthly report, we discussed a developing 50/100 MA bullish cross on the 4M frame. It is now only 3 basis points away.
ELLIOTT WAVES
At this stage, there is no substantial evidence to justify a change in the very long-term outlook. In March, the index possibly formed a long-term bottom, though it is yet to be confirmed.
Last Wave
At this point, DXY has possibly completed wave i and may be close to completing wave ii of (iii).
SUMMARY
DXY closed May in a constructive neutral-bullish position, avoiding bearish confirmation and holding the 8 EMA as support. The sideways action in the second half of May may be building a foundation for the next upward move, while the daily and weekly trends remain bullish.
The broader setup continues to lean bullish, especially with a potential Double Bottom breakout developing on both the daily and monthly frames. The 4M 50/100 MA bullish cross is also now only 3 basis points away. From an Elliott Wave perspective, DXY may have completed wave i and could be forming wave ii of (iii), keeping the larger upside scenario alive.
