The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, regained positive momentum on Tuesday, rising above the mid-99.00s during the first half of the European session. This move partially reversed the previous day's retracement from an over two-week high, with the near-term bias favoring bullish traders [1]. The uptick in the DXY was supported by hawkish comments from Federal Reserve Chair Kevin Warsh on Friday and increased inflation risks due to rising energy prices, which have strengthened market expectations for a potential interest rate hike in September [1]. Additionally, escalating tensions between the US and Iran have contributed to the safe-haven appeal of the US Dollar, reinforcing the positive outlook for the index [1].
Technical indicators show that the Moving Average Convergence Divergence (MACD) has turned slightly positive, and the Relative Strength Index (RSI) is near the neutral 50 mark. While these momentum indicators suggest stabilization, the DXY remains capped by a clustered resistance zone at 99.70-99.75, which includes the 100-day Simple Moving Average (SMA) and the 38.2% Fibonacci retracement of the July-August decline. Additional resistance levels are noted at the 50.0% retracement (100.07), 61.8% retracement (100.44), and stronger Fibonacci caps at 100.95 and 101.61. On the downside, initial support is at the 23.6% Fibonacci retracement (99.26), with a deeper structural floor near the cycle low at 98.54 [1].
In terms of daily performance, the US Dollar was the strongest against the New Zealand Dollar, gaining 0.39%. It also posted gains against the Australian Dollar (0.34%), Swiss Franc (0.22%), Euro (0.21%), Canadian Dollar (0.12%), Japanese Yen (0.11%), and British Pound (0.07%) [1].
No forward-looking statements or analyst opinions beyond the technical and fundamental factors influencing the DXY were provided in the article [1].
CONCLUSION
The US Dollar Index has rebounded, supported by hawkish Fed commentary, inflation concerns, and geopolitical risks, but faces significant resistance at the 99.75 level. Technical and fundamental factors suggest stabilization, with the market awaiting further developments on Fed policy and global tensions. The DXY's strength against major currencies highlights its safe-haven status amid ongoing uncertainties.