The US Dollar Index (DXY) eased modestly in Asian trading on Thursday, slipping to around 97.75 after touching the 98.00 level — its strongest in two weeks — on Wednesday. The index is down 0.10% on the day, though the lack of strong follow-through selling suggests caution for bearish traders.
Fed outlook caps USD momentum
The Greenback’s rally has lost steam as markets grow increasingly confident the Federal Reserve (Fed) will cut rates again in October and December, following its 25-basis-point reduction earlier this month. At the same time, Fed Chair Jerome Powell struck a cautious tone, warning that aggressive easing could risk leaving inflation unresolved. His remarks helped prevent deeper losses for the USD by tempering dovish bets.
Technical outlook: dip-buying interest intact above 97.50
From a technical perspective, Wednesday’s close above the 38.2% Fibonacci retracement of the August–September decline offers a constructive signal for USD bulls. Daily oscillators have started to turn positive, supporting the case for dip-buying on pullbacks.
Initial support sits near 97.50, followed by 97.25, aligning with the 23.6% retracement level. A decisive break lower could trigger fresh selling, exposing the 97.00 handle and opening the way toward 96.65. Further weakness could extend toward the 96.25–96.20 zone, the lowest level since July 2022.
On the upside, bulls would look for a sustained move above 98.00 to target 98.25, the 50% retracement level, with scope to test the 100-day Simple Moving Average (SMA) near 98.40. A break above 98.70 — the 61.8% retracement — would suggest a potential bottom is in place, setting the stage for a more extended rebound.
