United States Dollar Index trades around 99.75-99.70, hangs near three-month low
- DXY struggles to capitalize on the previous day’s modest bounce from an over three-month trough.
- Receding Fed-hike bets undermine the USD, though geopolitical risks help limit any further losses.
- Inflation risks support US bond yields, warranting caution for USD bears amid the US-Iran standoff.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, attracts fresh sellers during the Asian session on Friday, stalling the previous day's modest bounce from the vicinity of mid-98.00s, or the lowest since May 14. The index currently trades around the 98.80-98.75 region, down 0.10% for the day, and seems poised to register heavy weekly losses.
Traders pared their bets for an immediate interest rate hike by the Federal Reserve (Fed) following the release of soft US inflation figures last week, which is seen as acting as a headwind for the US Dollar (USD). Meanwhile, the immediate market reaction to the US Treasury Department's announcement that it will double the size of some long-dated debt buyback operations fades rather quickly amid inflation risks stemming from higher energy prices.
In fact, crude oil prices touched a fresh three-week high on Thursday after President Donald Trump said that the US will launch the most crushing economic operation against Iran. Trump also threatened severe penalties on any nation that helps Iran evade sanctions or does business with Iran. This keeps geopolitical risk premium in play, which might hold back traders from placing aggressive bearish bets on the safe-haven Greenback.
Moreover, the CME Group's FedWatch Tool indicates that investors are still pricing in around a 68% chance that the US central bank will raise borrowing costs at least once by the end of this year. The outlook, in turn, remains supportive of elevated US bond yields and should limit further losses for the DXY. Hence, it will be prudent to wait for some follow-through selling before positioning for any further USD-depreciating move.
DXY daily chart
Technical Analysis
The DXY keeps a bearish near-term tone beneath the 200-day Simple Moving Average (SMA) at 99.16 and key Fibonacci retracement levels overhead. The failed attempt to sustain above the 78.6% retracement at 98.52 earlier in the week leaves price exposed to further downside while rallies are likely to be capped by the dense cluster of resistance formed by the 200-day SMA and the 61.8% retracement at 99.22.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.11% | -0.92% | -0.22% | -0.77% | -0.71% | -1.34% | -1.59% | |
| EUR | 1.11% | 0.34% | 0.91% | 0.36% | 0.36% | -0.23% | -0.48% | |
| GBP | 0.92% | -0.34% | 0.63% | 0.00% | 0.02% | -0.57% | -0.87% | |
| JPY | 0.22% | -0.91% | -0.63% | -0.55% | -0.56% | -1.14% | -1.40% | |
| CAD | 0.77% | -0.36% | -0.01% | 0.55% | 0.00% | -0.59% | -0.87% | |
| AUD | 0.71% | -0.36% | -0.02% | 0.56% | -0.01% | -0.59% | -0.88% | |
| NZD | 1.34% | 0.23% | 0.57% | 1.14% | 0.59% | 0.59% | -0.30% | |
| CHF | 1.59% | 0.48% | 0.87% | 1.40% | 0.87% | 0.88% | 0.30% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
