US Dollar Index Price Forecast: Remains below 102.00, ascending channel bottom

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second successive day and trading around 101.90 during the Asian hours on Friday.

The DXY is retaining a bullish near-term bias as it holds above the 50-day Exponential Moving Average (EMA). Price is now testing the short-term nine-day EMA, which acts as immediate resistance, suggesting the latest advance is pausing rather than reversing. The 14-day Relative Strength Index (RSI) at 57.40 stays in positive territory without being overbought, hinting that bullish momentum remains constructive even as the FXS Fed Sentiment Index cools from prior highs.

Additionally, the technical analysis of the daily chart indicates that the dollar index is positioned slightly below the lower boundary of the ascending channel, signaling a loss of bullish momentum and a potential shift toward a downward trend. Because the price is only slightly below the boundary, it may be a temporary dip or a liquidity hunt aimed at triggering stop-loss orders just beneath support.

The US Dollar Index could rebound and test the initial barrier at the nine-day EMA of 102.07. A return to the channel would revive the bullish bias and support the dollar index to test the 18-month high of 102.94, reached on October 14, followed by the upper boundary of the ascending wedge at 103.70.

On the downside, the US Dollar Index may navigate the region around the 50-day EMA of 100.87. Further declines would expose the five-month low of 98.56, which was recorded on August 20.

Dollar fails to extend gains despite broadening US price pressures

Commerzbank’s Thu Lan Nguyen highlights that a run of stronger-than-expected US data has done little to deliver lasting support for the Dollar. She notes that “surprisingly strong US consumer price data on Wednesday were followed yesterday by stronger-than-expected retail sales and producer price figures,” adding that this sequence “adds to the evidence that price pressures are becoming increasingly broad-based.” However, Nguyen points out that “the dollar was unable to hold on to its gains from Wednesday,” underscoring that the latest upside surprises in inflation and activity have not translated into a sustained currency rally.

Warsh cautious on crisis scars but upbeat on structural growth and AI

Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, pointing to a slightly less impactful tone relative to the established baseline despite broadly consistent messaging since the September FOMC. The admission of being “over-scarred from the global financial crisis” underscores a lingering bias toward risk management and financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” and stresses that upcoming October and December meetings will be the true “crystallizing moment” for decisions on output, employment, and inflation. Warsh’s focus on AI as a demand-side force that will eventually bolster data confidence and monetary policy, while keeping near-term employment effects uncertain, reinforces a cautious but constructive stance for the Dollar and broader risk sentiment.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 127.51, signaling that the overall policy tone remains firmly in hawkish territory despite the slightly softer FXS Speechtracker score. For FX markets, the combination of a high FXS Fed Sentiment Index and Warsh’s emphasis on price stability and financial stability risks suggests ongoing support for the Dollar, with sensitivity to incoming data and AI-related developments into the year-end FOMC meetings.

(The technical analysis of this story was written with the help of an AI tool. Know more.)