USD Forecast: Dollar stalls in 97.60–98.30 range as bearish risks build

The U.S. Dollar Index (DXY) consolidates between 97.60–98.30 ahead of Jackson Hole, with Fed cut odds cooling to 84%. Despite short-term upside, the broader trend remains bearish unless price breaks above 99.00.

• Dollar consolidates in 97.60–98.30 range as markets await Jackson Hole and geopolitical developments.
• Fed cut odds slip to 84% after stronger U.S. data, cooling expectations for aggressive easing.
• Macro structure stays bearish, with rallies corrective unless DXY breaks decisively above 99.00.

Dollar holds firm as Jackson Hole looms, stagflation fears rise, and Fed cut bets cool

• Geopolitical backdrop: Markets are paying close attention to a high-stakes meeting between President Trump, Ukrainian President Zelenskiy, and European leaders aimed at resolving the Russia–Ukraine conflict. Simultaneously, the annual Jackson Hole symposium (Aug 21–23) is in focus, where Fed Chair Powell may provide critical insight into the central bank’s policy direction. Market-implied odds for a September rate cut have slipped to around 84%, down from earlier 98% levels.
• Economic data unsettling ease‑off bets: Stronger-than-expected U.S. inflation readings and a jump in producer prices (July PPI +3.3%) alongside lower jobless claims pushed the dollar index higher and diminished the likelihood of a “jumbo” rate cut. Expectations have shifted toward a more modest 25 bps cut in September, with another possible in October.
• Rising stagflation concerns: Survey data from Bank of America show around 70% of investors now expect stagflation—stubborn inflation plus slowing growth—within a year. A combination of cooling labor markets and elevated price pressures threaten to erode both the dollar’s strength and the value of bonds. Investors are seeking safety via inflation-linked bonds, gold, and inflation swaps.

Technical outlook: Dollar trapped in 97.60–98.30 range ahead of breakout

The U.S. Dollar Index (DXY) is consolidating within a range-bound structure, holding between 97.60 support and 98.30 resistance levels, with price currently trading near 98.20. Current price action highlights two key overlapping areas of interest:

1. Macro range (97.60–98.30): Defined by last week’s price action, after a continued drop last week due to stagflation concerns.
2. Micro range (97.70–98.80): A smaller consolidation inside the larger range, showing price was leaning towards a bearish consolidation but was invalidated by breaking out.

This reflects a market in balance, with neither bulls nor bears taking decisive control ahead of Jackson Hole and geopolitical catalysts.

However, this strength remains corrective in nature. From a broader perspective, the dollar is still operating inside a macro bearish structure, with repeated rallies failing to reclaim prior breakdown levels. Unless DXY can secure a decisive breakout above 99.00, the larger trend remains tilted to the downside.

Bullish scenario: Temporary upside within range

The dollar is showing signs of recovery as it presses into the 98.20–98.30 resistance zone, suggesting that buyers are attempting to test higher ground. While this move carries short-term bullish potential, it is still corrective within the larger bearish structure.

• A breakout and daily close above 98.50 could extend gains into the next liquidity zones.
• However, upside is expected to remain capped given the prevailing macro headwinds.

Bullish targets:

• Initial: 98.80
• Secondary: 99.00
• Extended (only if Fed/Jackson Hole surprises hawkish): 99.20

Bearish scenario: Rejection reinforces macro downtrend

The broader narrative remains bearish, and failure to clear 98.50 would likely reinforce this view. A rejection from resistance could see the dollar quickly retreat back into its range, exposing downside levels that align with the macro structure.

• A rejection at 98.20–98.50 would confirm resistance and resume bearish pressure.
• A break below 97.90 exposes the range floor at 97.60.
• A decisive daily close under 97.50 would unlock deeper downside toward the next liquidity pools.

Bearish targets:

• Initial: 97.90
• Secondary: 97.50
• Extended (macro continuation): 97.00 → 96.80

What’s next for the Dollar

The U.S. dollar remains caught in a tug-of-war between short-term resilience and long-term vulnerability. While stronger U.S. data has cooled expectations for aggressive Fed easing, stagflation concerns and weakening structural flows continue to cast a bearish shadow. Unless the DXY can reclaim and hold above 99.00, rallies are better viewed as corrective bounces within a broader downtrend. With Jackson Hole and geopolitical developments on the horizon, the coming sessions will be pivotal in determining whether the dollar sustains its foothold—or resumes its march lower toward 96.80.