Dollar Index outlook: Hits nine-week high on growing Fed rate hike prospects
US Dollar Index
The dollar keeps firm tone and hits new nine-week high on Monday, extending Friday’s rally (dollar was up 0.65%) and probed above psychological $100 barrier for the first time since early April.
Much better than expected US May labor data (NFP) signaled that labor market continues to strengthen and add to prospects for Fed rate hike, as prolonged uncertainty over the war in the Middle East fuels inflation, as well as dollar’s safe-haven appeal.
Technical picture on daily chart is firmly bullish and contributes to supportive fundamentals, with sustained break above $100 to confirm positive signal and open way for attack at key barriers at 100.32/48 (Nov 2025 / Mar 2026 peaks) guarding 100.94 (Fibo 38.2% of 110.00/95.35 Jan 2025 / Jan 2026 downtrend).
However, overbought stochastic, sideways-moving RSI, just under the overbought zone boundary and south-turned 14-d momentum, warn that bulls may take a breather for consolidation / limited pullback.
Recent range top at $99.50 zone and broken Fibo 61.8% ($99.30) offer solid supports which should contain potential dips and keep bullish structure intact.
Res: 100.32; 100.48; 100.94; 101.22.
Sup: 99.75; 99.50; 99.30; 99.00.
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.
