US Dollar Index Price Forecast: DXY trades above 101.50 as bullish bias persists ahead of FOMC

• After Friday’s modest recovery, DXY recoups an intraday decline and seeks further gains.
• With the crucial FOMC decision still in focus, bullish traders appear reluctant to commit.
• Technical signals continue to favour a move higher as the path of least resistance.

Buying interest around 101.60-101.55 on Monday is helping the US Dollar Index (DXY) extend Friday’s rebound from close to a three-week low. The index, which measures the Greenback against a basket of currencies, retains small intraday gains in early European trading. However, further buying remains limited and DXY is still below 102.00, with traders awaiting clearer guidance on the Federal Reserve’s (Fed) policy outlook.

Wednesday’s conclusion of the two-day FOMC meeting therefore remains the main focus, alongside Fed Chair Kevin Warsh’s remarks at the subsequent press conference. Thursday’s Advance US Q3 GDP report and Personal Consumption Expenditures (PCE) Price Index will also be important in shaping the DXY’s next directional move.

Meanwhile, support for the US Dollar (USD) comes from growing expectations that the US central bank will increase borrowing costs in response to inflation risks associated with elevated crude oil prices. Tensions between the Iran-backed Houthis in Yemen and Saudi Arabia also keep geopolitical risks in focus, lending further support to the safe-haven Greenback and the DXY.

Trading above both the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 38.2% Fibonacci retracement of the September-October advance leaves the index with a mildly bullish bias. The Moving Average Convergence Divergence (MACD) line is also hovering just above zero. Meanwhile, a Relative Strength Index (RSI) reading near 50 points to neutral but stable momentum.

Provided immediate support holds at 101.30, where the 38.2% retracement coincides with the 200-period SMA on the 4-hour chart, the technical picture suggests scope for the DXY to edge higher. A decisive breach of this support confluence would instead bring the lower Fibonacci levels at 100.78 and 100.27 into view. Broader structural demand lies further down towards 99.53 and 98.60.

Any advance would first encounter resistance at 101.93, the 23.6% Fibonacci retracement, before the more substantial barrier around the cycle high anchor at 102.96. Sustained buying above 103.00 would be regarded as a new trigger for bullish traders, paving the way for a resumption of the established uptrend from September’s monthly swing low.

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

DXY retains a bullish bias on the 4-hour chart