US Dollar Index Shows Modest Gains, Traders Await Federal Reserve Signals
The US Dollar Index (DXY), which measures the Greenback against a range of currencies, is seeing some buying interest around the 101.60-101.55 level this Monday. This comes after a recovery on Friday from a three-week low. While the index is managing to maintain slight gains early in the European session, it still struggles to break above the 102.00 threshold as traders hold out for further indications regarding the Federal Reserve’s policy direction.
Consequently, all eyes will be on the results of the upcoming two-day Federal Open Market Committee (FOMC) meeting scheduled for Wednesday, along with remarks from Fed Chair Kevin Warsh during the press conference that follows. Additionally, the Advance US Q3 GDP figures and the Personal Consumption Expenditures (PCE) Price Index, set for Thursday release, will be crucial in shaping the future movement of the DXY.
Meanwhile, there’s an increasing consensus that the US central bank is likely to hike borrowing costs due to ongoing inflation concerns, particularly driven by high crude oil prices, which is giving the US Dollar (USD) a bit of a boost. The backdrop of geopolitical tensions, especially between the Iran-aligned Houthis in Yemen and Saudi Arabia, is also helping to support the DXY as investors seek safe havens.
The index seems to maintain a slightly positive outlook above the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 38.2% Fibonacci retracement level from the increase seen in September and October. The Moving Average Convergence Divergence (MACD) indicator is just above zero, while the Relative Strength Index (RSI) hovers around the 50 mark, suggesting a stable but neutral momentum.
The current technical situation implies that the DXY might keep inching upward as long as the immediate support at the 38.2% retracement level at 101.30, which coincides with the 200-period SMA, remains intact. A decisive drop below this support could expose deeper Fibonacci levels at 100.78 and 100.27. Broader structural demand may emerge at even lower levels, around 99.53 and 98.60.
On the upside, the first resistance is at the 23.6% Fibonacci retracement at 101.93, with a stronger barrier seen at the cycle high anchor near 102.96. A clear break above the 103.00 level could serve as a new signal for bullish traders, potentially marking the restart of the established upward trend that began from September’s lows.
