United States Dollar Index Price Forecast: Holds above 101.00 ahead of US CPI, Fed's Warsh

• DXY pauses after a two-day rally as bulls turn cautious ahead of the US CPI and Fed’s Warsh.
• The constructive technical setup backs the case for an extension of the recent move higher.
• Any corrective pullbacks might attract buyers and remain limited near the 100.55-100.50.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, sticks to modest intraday losses through the early European session on Tuesday as bulls seem hesitant ahead of the latest US consumer inflation figures. Apart from this, US Federal Reserve (Fed) Kevin Warsh's inaugural congressional testimony will be looked for fresh cues about the policy path, which, in turn, will play a key role in determining the near-term trajectory for the buck.

In the meantime, a further escalation of tensions between the US and Iran, along with the closure of the Strait of Hormuz, remains supportive of elevated Crude Oil prices and continues to fuel inflationary concerns. This reaffirms expectations that the Fed will raise borrowing costs by the end of this year and helps limit the downside for the US Dollar (USD). Hence, it will be prudent to wait for strong follow-through selling before confirming that the index has topped out.

From a technical perspective, the DXY holds a bullish near-term bias above the 50-day Simple Moving Average (SMA) and the 100.50-100.55 resistance breakpoint, now turned support. Furthermore, the Relative Strength Index (RSI) at 60.54 sits in bullish territory without being overbought. However, the Moving Average Convergence Divergence (MACD) indicator remains slightly negative, hinting that upside momentum is constructive but not aggressive.

Hence, it will be prudent to wait for some follow-through buying beyond the previous year-to-date high, around the 100.80 area, before positioning for further gains. The DXY might then aim to surpass the 102.00 mark and prolong the move up from the May monthly swing low. On the flip side, initial support is located at 100.55-100.50 ahead of the 50-day SMA at 99.92, which marks the nearest underlying demand area for any corrective pullback.

As long as the DXY holds above this level, the broader technical structure favors further consolidation with a mild upward bias rather than a deeper reversal.

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

DXY daily chart