The U.S. dollar currency exchange traded fund has been faltering on U.S. fiscal woes and Fed policy, but the Dollar Index could still dip further after falling below a key support level.

JPMorgan Chase & Co technical analyst Niall O’Connor believes the benchmark dollar gauge could depreciate to its weakest level since Sept. 14 2012 after dipping below a key area, reports Joseph Ciolli for Bloomberg.

“The index is finally putting some distance from the big area of support between 79.50 to 79.65,” O’Connor said in the article. “That suggests there’s more downside risk, and we’re probably more likely to see a closer test of the February low, and possibly down to the September low.”

The Dollar Index will test its first supporting level at 78.92, this year’s low, before hitting last year’s 78.60 low.

The index was at around 79.21 late Tuesday.

The U.S. dollar was depreciating against a basket of foreign currencies on the weaker-than-expected non-farm payrolls data. The U.S. economy generated 148,000 new jobs in September and the jobless rate fell 7.2%.

The PowerShares Dollar Bull ETF (NYSEArca: UUP) was down 0.6% Tuesday.

Meanwhile, the euro currency is trading around a two-year high against the greenback, GlobalPost reports. [Euro ETF Becomes Safe-Haven on U.S. Fiscal Woes]

“The market has drawn even more conviction from the weaker-than-expected non-farm payrolls (NFP) data that the Fed will not be tapering the size of its monthly asset purchases until next year,” Rabobank analyst Jane Foley said in the GlobalPost article. “The dollar has been pushed even further onto the backfoot and this will lead to even further support for euro/dollar.”

The CurrencyShares Euro Trust (NYSEArca: FXE) gained 0.8% Tuesday.

“You’ve seen confirmation in a lot of dollar pairs,” O’Connor added. “We’re set up for a broader-dollar-weakness story that will continue to develop.”

PowerShares Dollar Bull ETF

For more information on the USD, visit our U.S. dollar category.

Max Chen contributed to this article.

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