US Dollar Index Price Analysis: Attempts to retrace its recent losses, trades near 102.20

The US Dollar Index (DXY) rebounds after two days of losses, trading around 102.20 during the Asian session on Wednesday. However, the DXY faces challenges due to the Federal Reserve’s (Fed) dovish outlook on the interest rates trajectory. Investors expect the Fed to implement rate cuts in early 2024.

However, during a Wednesday interview on Fox TV, Chicago Fed President Austan Goolsbee commented that the "market has gotten ahead of themselves on euphoria" regarding potential interest rate cuts.

The 14-day Relative Strength Index (RSI) is below the 50 level, signaling a bearish sentiment. Additionally, the negative positioning of the Moving Average Convergence Divergence (MACD) line below the centerline, and showing the divergence below the signal line could serve as confirmation of the bearish momentum for the Dollar Index in the market.

The lagging indicators suggest that the US Dollar Index could test the psychological support region around the weekly low at 102.06 level before the 102.00 level. A firm break below the key support region could put pressure on the DXY to navigate December’s low at 101.77 level followed by the 101.50 major level.

On the upside, The DXY could find the key resistance around the 102.50 major level before the seven-day Exponential Moving Average (EMA) at 102.58 lined up with the weekly high at 102.63 level.

A breakthrough above the resistance area could support the Dollar Index buyers to approach the psychological level at 103.00 near the 23.6% Fibonacci retracement at 103.08 level.

Dollar Index: Daily Chart