The U.S. Dollar’s down-trend just celebrated a birthday. It was just a year and a day ago that DXY set a fresh 14-year high at 103.82. As we came into last year, little looked to stand in the way of the Greenback’s bullish ascent, as the ‘Trump Trade’ aka the ‘reflation trade’ continued to drive investors into U.S. assets of both an equity and currency variety. But, that high that was set on January 3rd was not to be tested again, as sellers began to show in January, and remained in-control of USD price action for pretty much all of 2017. This bearish drive saw as much as -12.3% of the Greenback’s value erased when a low was set in September; and given that this is a move in a non-levered currency, that’s quite the change-of-pace.

But, after that low was set in September, a bit of hope began to build around Dollar bulls as USD spent the next two months trading higher: But after faltering at the 95.00 level, bears came back and have remained in-force ever since. This week saw DXY gap-lower, and that weakness has continued to show as price action is peeling towards the 2017 low which is also the three year low in DXY.

U.S. Dollar via ‘DXY’ Daily: Bearish Trend Turns One Year Old, Continues into 2018

The big question at this point is whether we see some element of response at these three-year-lows. The bounce that showed up in September took place around a key level. The price of 91.36 is the 50% Fibonacci retracement of the 2014-2017 bullish move. This gave rise to the potential for 2017 being some element of digestion in a longer-term theme of USD-strength; but if we take that level out, there is little standing in the way of a run towards the psychological level of 90.00.

U.S. Dollar via ‘DXY’ Weekly: Fast Approaching Three-Year Low, 50% Retracement of 2014-2017 Move

Complicating the prospect of taking on bearish exposure in the Greenback at the moment is the fact that we’re sitting at short-term support, around a level that had held the lows on Tuesday and Wednesday. For traders looking to take on short-side positions in the U.S. Dollar, awaiting a test of resistance could be a much more palatable way of approaching matters, and on the below two-hour chart, we’ve added three potential levels of interest up to 92.50, which was the November swing-low.