US Dollar Price Forecast: Remains capped below the 100-period EMA near 106.50
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The US Dollar Index recovers to near 106.50 in Wednesday’s early European session.
The bearish outlook of the DXY remains intact below the 100-period EMA.
The first downside target to watch is 106.20; the immediate resistance level emerges at 106.85.
The US Dollar Index (DXY) rebounds to around 106.50 during the early European session on Wednesday. Analysts expect that US President Donald Trump’s plans for higher tariffs have raised inflation worries at the US Federal Reserve (Fed), which might lead the Fed to keep interest rates higher for longer. This might support the US Dollar against its rivals.
Investors await the US Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation gauge, on Friday for fresh impetus. This report might offer some hints about the US interest rate path.
Technically, the DXY keeps the bearish vibe on the 4-hour chart as the index remains capped below the key 100-period Exponential Moving Average (EMA). Additionally, the Relative Strength Index (RSI) stands below the 50-midline near 46.40, indicating that further downside cannot be ruled out in the near term.
The lower limit of the Bollinger Band at 106.20 acts as an initial support level for the US Dollar Index. A breach of this level could expose the 105.41, the low of December 6, 2024. The next contention level to watch is 104.19, the low of November 7, 2024.
On the bright side, the first upside barrier is located at 106.85, the upper boundary of the Bollinger Band. Extended gains could pave the way to the 107.15, the 100-period EMA. The next hurdle is seen at the 108.00 psychological level.
US Dollar (DXY) 4-hour chart
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