US Dollar Index Price Forecast: Fresh upside likely if it breaks above 99.40
The US Dollar (USD) recovers on Tuesday after a sharp corrective move the previous day amid firm expectations that the Federal Reserve (Fed) will not cut interest rates this year.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% higher to near 99.18. The DXY corrected to near 98.94 on Monday after posting a fresh over five-week high at 99.41 the same day.
According to the CME FedWatch tool, the possibility of the Fed holding interest rates at their current levels by the year-end is 53%, while the rest favors at least one interest rate hike this year. This is a sharp turnaround from two interest rate cuts anticipated before the onset of the war in the Middle East.
Dovish Fed prospects have waned significantly as elevated oil prices due to restricted energy flows through the Strait of Hormuz have prompted United States (US) inflation expectations. The US Consumer Price Index (CPI) data showed last week that the headline inflation accelerated to 3.8% Year-on-Year (YoY), the highest level seen in almost three years.
For more cues on the Fed’s monetary policy outlook, investors will focus on the Federal Open Market Committee (FOMC) minutes of the April policy meeting, which will be released on Wednesday.
US Dollar Index technical analysis
The US Dollar Index Spot trades higher at around 99.18 at the press time. The near-term bias is mildly bullish as price holds above the 20-period Exponential Moving Average (EMA) at 98.63, suggesting buyers are regaining control after the recent rebound.
The Relative Strength Index (RSI) at 57.08 leans to the upside without yet signaling overbought conditions, hinting that positive momentum could support further gains while the current structure holds.
On the downside, immediate support is located at the 20-day EMA around 98.63, with the latest swing low zone below it acting as a broader demand area if a pullback develops. As long as the index sustains above this moving average, dips are likely to find buyers, keeping the broader recovery bias intact in the sessions ahead. Looking up, the DXY could extend its advance toward the April 8 high of 99.70 and the psychological level of 100.00, if it manages to break above the May 18 high of 99.41
(The technical analysis of this story was written with the help of an AI tool.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
1.7 Trillion Unlock V.S 1.7 Trillion Buyback: Goldman Sachs Bets on the Latter to Sustain the US Stock Market Bull Run
Goldman Sachs expects US companies to raise $600 billion in 2027, sets S&P target at 8,700 points, and states that buybacks and profits can withstand supply shocks.
Next target 8%? US mortgage rates soar to a three-year high as “higher for longer” trades sweep the real estate market
U.S. mortgage rates are experiencing a sharp upward surge. In just over a month, the average 30-year fixed mortgage rate has climbed by a full percentage point, reaching above 7.5%, the highest level in three years. As a result, homebuyer demand has plummeted, and existing home sales in September are expected to show a significant decline.
Bank of America Hartnett: Interest rate hikes become the biggest bullish factor, the logic of ending the bond bubble is spreading
Bank of America strategist Hartnett has made a counterintuitive assessment: the most favorable event for the stock market before the end of the year would be for the Federal Reserve to proactively raise interest rates in October—using a tightening move to curb the out-of-control long end. If the Fed proves its willingness to control inflation and term premium through an October rate hike, the market may actually stop worrying about the 10-year yield surging toward 6%, thereby easing pressure on stocks. Currently, while US stocks have not yet been brought down by interest rates, cracks are quietly spreading in South Korean brokers, French government bonds, and CCC-rated credit bonds.
Goldman Sachs chart: "Gasoline prices determine the US midterm election"! Prediction market shows "Democrats have a 65% chance of sweeping both chambers"
A recent report from Goldman Sachs shows that the Iran war caused oil prices to surge from $3 to $5 per gallon, while the Democratic Party's lead in the general ballot simultaneously expanded from 5 to 9 percentage points—two trends that closely align. Goldman Sachs believes that Hurricane Isaias, once again impacting 63% of offshore capacity in the Gulf of Mexico, has made oil prices a true "ballot decider." Bank of America warns that if the Senate sweeps both chambers, it will trigger significant risk aversion, potentially causing the stock market to plunge by over 10% and weakening the US dollar.
Crypto prices
More
