Stretched USD decline nears key support levels amid extreme bearishness By Investing.com

Investing.com - The lcm foreign exchange dealerU.S. dollar has declined 9.63% since peaking at 1,325 in January 2025, with the Bloomberg USD index now testing critical support at the 1,200 level.

The 1,200 mark represents not only a psychological round number but also coincides with a long-term trend line and the 2023 closing low, making it a significant technical reference point for currency traders.

Technical indicators suggest the dollar’s decline may be overextended, with the weekly Relative Strength Index (RSI) showing modest stretching while positioning metrics reveal extreme bearishness.

Asset managers currently hold record short positions in DXY futures relative to open interest, according to Bank of America sentiment surveys from June 13 and June 17, 2025.

Several major currency pairs are simultaneously testing pivotal long-term support levels, including EUR/USD stalling in the 1.15 range, USD/JPY near 143/140, AUD/USD at .6630-.6600, USD/KRW around 1350, and USD/CNH approaching 7.16.

The current situation bears similarities to the 2017 dollar bear market, when the DXY bottomed in early September after an 11% decline - matching this year’s drop - though the Bloomberg USD index has now broken below its 200-week simple moving average at 1,240, a technical level that typically encourages trend followers to sell rebounds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.