US Dollar Index Price Analysis: A drop to 105.80 is not ruled out

• DXY comes under some pressure following Tuesday’s strong gains.
• The breach of the 106.00 zone exposes extra losses.

DXY gives away part of the weekly advance and returns to the sub-107.00 area on Wednesday.

There seems to be strong contention in the 106.00 neighbourhood for the time being, while the next barrier on the upside is not seen before the 2022 top near 109.40 (July 14). Bouts of further weakness in the dollar carries the potential to drag the index to the post-FOMC peak at 105.78 (June 15).

Despite the ongoing downside, the near-term outlook for DXY is seen constructive while above the 5-month support line near 103.80.

In addition, the broader bullish view remains in place while above the 200-day SMA at 99.31.

DXY daily chart