The US Dollar seems to be on a roll. This week, the DXY Dollar Index is up by about 0.6 percent, gunning for its 5th week of straight gains. If this keeps up, it would mark the longest winning streak since way back in early May 2022. But I think the dollar is now facing a crucial challenge ahead.

Check the chart: the DXY is hanging out just below this important falling trendline since February, which has been directing its downward movement. On top of that, the line is closely in sync with last month’s high of 103.57. To me this looks like a tough resistance line for bulls.

However, a positive Golden Cross is about to happen between the 20- and 50-day MAs. This gives me some hope of a potential short-term upswing. If the resistance breaks, it might be game over for the dollar bears (at least in the short term) because the next likely target would logically be the May high of 104.69. And then? Well, the February peak of 105.88 would be my next target. But if the vibe changes and there’s a sell off, then all eyes are on the MAs for some backup.

But let’s switch gears. Unlike the confident DXY, the S&P 500 has been hanging out near the crucial rising support line since March. This week, the stock market index took a hit of around -1.4%. If this slide continues, it’ll be a 3-week losing streak – the longest since way back in late February.

Now, if that trendline breaks, things can get a bit more bearish. The spotlight then moves to the alignment of the 38.2% Fibonacci retracement level (4330) and the 100-day MA. This may very well be enough to keep the bullish bias intact. But, on the flip side, if the trendline stands strong, then a turnaround is likely and I shall be focusing on the July high of 4634.