US Dollar Index sub-$90 as China consider yuan devaluation

• China is studying a devaluation of the yuan to gain a competitive advantage.
• The FOMC minutes will be released on Wednesday at 18:00 GMT.
• The US Dollar Index is under pressure trading below the $90 level.

The US Dollar Index (DXY) is trading at around $89.86 down 0.32% on Monday as the market is mainly taking its cues from the US-China trade war developments. China has announced that it is evaluating the impact of a devaluation of its currency in order to gain a competitive advantage in the trade war. The news is weighing on the US Dollar as the escalation between the US and China intensifies. On the US macroeconomic front, no news will be released in the North American session, however, investors will be paying close attention the FOMC minutes released on Wednesday at 18:00 GMT. 
 
US Dollar Index weekly chart

Last week the bulls tried to break the weekly range above $90.60 but failed and instead the bears managed to create a doji candle, which is suggesting that lower prices can be in store. The bears are currently attempting to break successfully below last week’s low at $89.82.

US Dollar Index daily chart

On the daily chart, the bulls are relying on the 50-period simple moving average which is at $89.92 exactly in conjunction with last week’s low. A successful break below the level can lead to a test lower at $89.50 and $89 previous demand levels. The Relative Strength Index (RSI) is currently trading at 49.16 and the Moving Average Convergence/Divergence (MACD) bullish momentum is slowing down.

US Dollar 4-hour chart

The market is currently testing the key $89.92 level which is last week’s low and the 50-period simple moving average on the daily time frame. Adding support to the level is the presence of the 100-period simple moving average also at $89.92 and the 200-period simple moving average at $89.95. A break below can lead to the 89.50-89.25 support area; the $89.50 level is a previous demand level and the $89.25 level is the swing low of March, 28. Immediate resistance is at the $90 psychological mark. Further up, the $90.27 swing is the next scaling point, followed by $90.60 last week’s high. The RSI and MACD are both in bearish territories.