US Dollar Price Forecast: Struggles to Break Above 100-Period EMA Near 106.50.

US Dollar Index (DXY) Forecast: Struggles Below 100-Period EMA as Market Awaits Key US PCE Data

The US Dollar Index (DXY) rebounded to 106.50 during the early European session on Wednesday but remains under pressure below the key 100-period Exponential Moving Average (EMA). Market analysts attribute this cautious movement to concerns over potential inflationary effects stemming from Donald Trump’s proposed higher tariffs, which could influence the US Federal Reserve (Fed) to maintain higher interest rates for an extended period.

Market Focus: US PCE Inflation Data

Traders and investors are eagerly awaiting the release of the US Personal Consumption Expenditures (PCE) data on Friday, the Fed’s preferred inflation gauge. This report is expected to provide fresh insights into the future interest rate trajectory, impacting the US Dollar’s performance against its rivals.

Technical Outlook: Bearish Bias Prevails

From a technical standpoint, the DXY maintains a bearish tone on the 4-hour chart, as it struggles to break above the 100-period EMA. The Relative Strength Index (RSI) is positioned at 46.40, below the critical 50-midline, suggesting that further downside risks remain in play.

• Key Support Levels:

  • 106.20 – Lower Bollinger Band (initial support)
  • 105.41 – December 6, 2024, low
  • 104.19 – November 7, 2024, low

• Key Resistance Levels:

  • 106.85 – Upper Bollinger Band (first resistance)
  • 107.15 – 100-period EMA
  • 108.00 – Psychological level

US Dollar Outlook: Will DXY Regain Strength?

While the US Dollar Index currently faces resistance, upcoming economic data releases—especially the US PCE inflation report—could determine whether the greenback can regain bullish momentum. A strong reading may fuel speculation of prolonged Fed rate hikes, potentially boosting the USD. On the other hand, weaker inflation data could accelerate DXY’s downside move.

Stay tuned for further updates on the US Dollar’s price action and key market-moving events.