US Dollar Index Price Forecast: DXY bulls appear hesitant near 101.75, below 23.6% Fibo.

• Wednesday brings modest buying interest in DXY, but bullish conviction remains limited.
• The safe-haven USD finds support from geopolitical risks and expectations of a Fed rate rise.
• Technical signals suggest caution is needed before taking aggressive bullish positions.

Trading around 101.75-101.80 in Wednesday’s early European session, the US Dollar Index (DXY) retains modest intraday gains as it extends its recovery from the near three-week low reached the day before. The index, which measures the Greenback against a basket of currencies, is edging upwards, although buyers lack conviction.

Conflicting indications about US-Iran peace talks are sustaining the geopolitical risk premium, lending support to the safe-haven US Dollar (USD). An unconfirmed report on Tuesday suggested that Qatar and Pakistan had proposed a compromise plan to the US and Iran that satisfied both sides’ demands. Subsequently, however, Bloomberg reported that a diplomat involved in the US-Iran negotiations had challenged reports suggesting an agreement was close.

Meanwhile, oil prices remain elevated with support from the US-Iran stand-off over the Strait of Hormuz. This is adding to inflation risks and reinforcing expectations of a hawkish Federal Reserve (Fed). The CME Group's FedWatch Tool indicates that traders see around a 90% probability of the US central bank raising borrowing costs again in December. These expectations provide a further source of support for the DXY, favouring bullish traders.

With the index remaining above its 200-period Exponential Moving Average (EMA) on the 4-hour chart, the short-term technical outlook is neutral to mildly positive. Nevertheless, the Moving Average Convergence Divergence (MACD) sits close to zero and its histogram readings are flat. A Relative Strength Index (RSI) reading of 44.57 also suggests little directional conviction, supporting the assessment that the index is consolidating.

Confirmation that the recent correction from the highest level since April 2025 has ended would therefore require a sustained recovery above the 23.6% Fibonacci retracement at 101.90. Such a move would set the stage for further gains, potentially taking the DXY towards the more substantial barrier at the cycle-high anchor near 102.92.

Should the index weaken, the first support area lies at 101.25, where the 38.2% retracement meets the 200-period EMA. Further down, support levels include the 50.0% retracement at 100.76 and the 61.8% retracement at 100.25. Beyond these lie the 78.6% level at 99.52 and the previous swing low around 98.59.

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

DXY holds above its 200-period EMA on the 4-hour chart