US Dollar Index pauses at 98.00 as key data looms

The US Dollar Index, poised on Friday to record its strongest weekly performance since October – supported by better‑than‑expected economic data, a more hawkish Fed outlook, and simmering tensions between the US and Iran – is posting a fifth consecutive daily gain, hovering just below the four‑week high near the psychologically significant 98.00 level.

However, the upside has stalled after a close above the 50‑day simple moving average (SMA) as market focus now turns to the release of the US core PCE price index and advance fourth‑quarter GDP figures later in the day, which could determine the next directional move.

The momentum indicators reflect a wait‑and‑see stance, with the RSI flatlining above neutral, the stochastics easing at the overbought threshold, and the MACD edging higher above its signal line but still below zero – collectively warranting near‑term caution.

That said, the index has retraced more than 61.8% of the January 15-27 pullback to multi‑year lows, with price action currently sitting at that key retracement level near 97.76. This area clusters with the 50‑day SMA and has capped gains since late January. Beyond this region, resistance stands between 98.00-98.42, which encapsulates the 200‑day SMA, followed by 98.85 before a full retracement toward the January highs at 99.30.

Conversely, support is found at 97.50, followed by the 20‑day SMA near 97.00, where a doji candle had formed earlier this week before the strong rebound. Further support lies at 96.80 and the 23.6% Fibonacci level at 96.26, positioned just above the monthly lows and helping shield price action from a deeper slide back toward multi‑year lows.

All in all, the US dollar index is clinging to recent gains and on track for its best week in more than four months. However, strong resistance at 98.00 could continue to cap the recovery if the catalysts driving the latest upside begin to lose momentum.