US Dollar Index Price Forecast: Stabilizes below 61.8% Fibo retracement at 99.20

The US Dollar (USD) recovers its early losses and turns marginally positive during the European trading session on Tuesday. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 98.95.

Broadly, the US Dollar is under pressure even as traders have raised hawkish Federal Reserve (Fed) expectations after the upbeat United States (US) Nonfarm Payrolls (NFP) data release on Friday.

Commerzbank wrote in a note that the stronger-than-expected US employment report revived expectations for a September Fed rate hike. They highlight that “the Fed funds futures increased the probability of a 25bp hike on 16 September to 62% compared with 51% before the employment report”.

This week, major triggers for the US Dollar will be the US Producer Price Index (PPI) and the Consumer Price Index (CPI) data for August, which will be released on Thursday and Friday, respectively.

Analysts at Deutsche Bank stress that “all eyes will be on the August US CPI print on Friday, preceded by the PPI on Thursday,” noting that these releases represent “the last set of inflation readings before the Fed’s next decision on September 16.” Their US economists expect a notable pickup in price pressures, with August’s headline CPI forecast “to come in at +0.38% MoM vs. +0.07% previously,” while they see underlying pressures remaining contained as core CPI is projected “to print +0.21% vs. +0.22%.”

US Dollar Index Technical Analysis

In the daily chart, the Dollar Index Spot trades at 98.97, keeping a bearish near-term bias as it holds below the 20-day Exponential Moving Average (EMA) at 99.37 and the 61.8% Fibonacci retracement at 99.21.

The Relative Strength Index (14) near 41 stays under the neutral 50 line, hinting at subdued upside momentum while the index consolidates beneath this overhead cluster of resistance levels.

On the topside, initial resistance emerges at 99.21 from the 61.8% retracement, followed by the 20-day EMA at 99.37 and the 50% retracement at 99.70; further advances would target 100.20 and 100.81 as higher Fibonacci barriers. On the downside, immediate support is seen at the 78.6% retracement around 98.50, with a deeper floor at the prior swing low and 100% retracement near 97.60, where buyers may attempt to slow any extension of the decline.