US Dollar Index Price Forecast: Outlook remains bearish near 103.50

The US Dollar Index gains ground to near 103.60 in Tuesday’s early European session, up 0.14% on the day.

The negative outlook of the index remains in play with a bearish RSI indicator. 

The first support level to watch is 103.35; the immediate resistance level is seen at 104.10. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, recovers some lost ground to near 103.60 during the early European session on Tuesday. The potential upside for the Greenback might be limited amid fears that US President Donald Trump's tariff policies could trigger a broader economic slowdown.

The US Federal Reserve (Fed) interest rate decision will be in the spotlight on Wednesday, with no change in rate expected. According to the CME FedWatch tool, the markets have priced in nearly 60% chance of rate cuts, a little over two reductions, for the rest of the year.

According to the daily chart, the bearish sentiment of the DXY remains intact as the index holds below the key 100-day Exponential Moving Average (EMA). Furthermore, the downward momentum is supported by the 14-day Relative Strength Index (RSI), which stands below the midline near 31.50, supporting the sellers in the near term. 

The initial support level for the USD index emerges at 103.35, the low of March 17. Further south, the next contention level is seen at 102.20, the lower limit of the Bollinger Band. The additional downside filter to watch is 100.53, the low of August 28, 2024. 

On the bright side, the first upside barrier for the DXY is located at 104.10, the high of March 14. Any follow-through buying above this level could pave the way to 106.15,  the 100-day EMA. A decisive break above the mentioned level could see a rally to 107.38, the high of February 19.  

US Dollar Index (DXY) daily chart