United States Dollar Index Price Forecast: DXY consolidates around 99.00 ahead of US CPI

• DXY holds steady within the previous day’s range as trades keenly await the US CPI report.
• Rising September rate hike bets and geopolitical risks act as a tailwind for the Greenback.
• The mixed technical setup warrants some caution before placing aggressive directional bets.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, sticks to a mildly positive bias through the early European session, though it remains confined within the previous day's broader range. The index currently trades just above the 99.00 mark as investors keenly await the release of the latest US consumer inflation figures for more cues about the Federal Reserve's (Fed) policy path and to determine the near-term trajectory.

In the meantime, the US Producer Price Index (PPI) report, released on Thursday, pointed to still sticky inflationary pressures, prompting traders to lift their bets for a September rate hike. Furthermore, energy-driven inflation fears, along with persistent geopolitical risks stemming from further escalation of tensions between the US and Iran, continue to act as a tailwind for the safe-haven US Dollar (USD). This favors bulls and backs the case for further gains.

The DXY is capped beneath the 200-period simple moving average (SMA) at 99.12 and a series of higher Fibonacci retracements, which keeps the near-term tone cautious despite a moderately bullish Relative Strength Index (RSI) around 59. That said, a slightly negative and flattening Moving Average Convergence Divergence (MACD) (12, 26, 9) hints that upside momentum is losing traction while the index holds under its 200-period SMA on the 4-hour chart.

Meanwhile, the 38.2% Fibonacci retracement level of the slide from the monthly swing high, at 99.08, is being actively tested as a pivot. This is followed by the next relevant support at the 23.6% Fibo. retracement at 98.89, with a deeper bearish extension exposing the lower structural floor around 98.59. On the topside, initial resistance is located at the 200-period SMA at 99.12, followed by the 50.0% retracement at 99.23 and the 61.8% level at 99.38. Further gains would then face additional barriers at 99.59 and the recent cycle high area near 99.86.

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

DXY 4-hour chart