Dollar Index outlook: Geopolitical uncertainty and inflation concerns to continue to provide support

Slobodan Drvenica Windsor Brokers

The US dollar jumped on opening on Monday and quickly reversed gains but remained within approx. $50 range for the day.

Fresh escalation in the Middle East added to inflation concerns and expectations that the Fed would keep its hawkish stance for some time, with news that large pension funds are returning to dollar, after last year’s migration, added to supportive factors.

Larger picture shows the index trending higher off 2026 low (95.35) within a bull-channel, though, daily chart shows the action in a narrow-range sideways mode, capped by previously broken Fibo barrier at 100.94 (38.2% retracement of 110.00/95.35 descend) and supported by daily Kijun-sen (100.32).

Daily studies remain predominantly bullish, though 14-d momentum slipped into negative territory that may keep near-term action in directionless mode and keep the downside vulnerable.

However, bullish structure is expected to remain intact while the price holds above trendline support (100.29) and keep focus at 101.55 (new 2026 peak, the highest since early Nov 2025), break of which to signal continuation of an uptrend from 95.35 and expose targets at 101.80 (12 May 2025 peak) and 102.67 (50% retracement of 110.00/95.35).

Caution on break below 100 level (psychological / Fibo 38.2% of 97.44/101.55 upleg) that may sideline bulls for potential deeper pullback.

Res: 101.04; 101.55; 101.80; 102.67

Sup: 100.55; 100.29; 100.00; 99.50

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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