NEW YORK - March 7, 2011 - Foreign-exchange strategists at RBC Capital Markets warned Monday the U.S. dollar is trading in a crucial range, with a close below a key technical benchmark potentially triggering further trouble for the  world’s reserve currency.

The greenback fell against currencies, such as Canada’s, linked to commodities, as well as the euro. The so-called DXY index, which tracks the dollar’s value against Amerika’s major trading partners, slipped Monday to 76.310, the weakest since November. (The euro makes up over half of that basket.) As of roughly 12:30 pm ET, the Canadian dollar traded at US$1.0274.

George Davis, managing director and chief technical analyst at RBC Capital Markets, said a DXY session close below 76.20 - last hit three years ago - would expose the U.S. dollar to further downside risk.

“The moment of truth is now at hand,” Davis told clients in a note.

A close below that 76.20 mark “would signal that a significant shift in sentiment is underway - from bullish to bearish.”

He suggested that a pullback in commodity prices - which have surged on political unrest in North Africa and the Middle East - will likely be required “to arrest bearish pressure” on the greenback.

Also weighing on the U.S. dollar are wider rate spreads between Europe and the United States, the result of hawkish talk last week from European Central Bank president Jean-Claude Trichet, who said an interest rate hike next month was possible.

Equity market strength is also bearish for the U.S. dollar, as long as investors are willing to exit U.S. Treasuries for stocks - especially amid ultra-accomodative monetary policy from the U.S. Federal Reserve.