Near 101.75: US Dollar Index Price Forecast points to hesitant DXY bulls below 23.6% Fibo.

• Buying interest returns to DXY on Wednesday, but bullish conviction remains limited.
• Safe-haven USD demand benefits from geopolitical uncertainty and bets on a Fed rate increase.
• Aggressive bullish positioning calls for caution given the technical picture.

The US Dollar Index (DXY) holds near 101.75-101.80. Tracking the Greenback against a basket of currencies, the index retains modest intraday gains in Wednesday’s early European session. It is extending its recovery from the near three-week low reached the previous day, although the advance lacks bullish conviction.

Conflicting signals on US-Iran peace negotiations sustain the geopolitical risk premium, supporting the safe-haven US Dollar (USD). An unconfirmed report on Tuesday suggested Qatar and Pakistan had put forward a compromise plan to the US and Iran that satisfied both sides’ demands. A later Bloomberg report, however, cited a diplomat involved in the negotiations who disputed suggestions that an agreement was imminent.

Elevated oil prices also continue to draw support from the US-Iran impasse over the Strait of Hormuz. This adds to inflation risks and strengthens expectations of a hawkish Federal Reserve (Fed). Traders assign around a 90% probability to another increase in US borrowing costs in December, according to the CME Group’s FedWatch Tool. Those expectations provide a further source of support for the DXY, favouring bullish traders.

Holding above the 200-period Exponential Moving Average (EMA) on the 4-hour chart leaves the index’s near-term technical outlook neutral to mildly positive. Momentum indicators nevertheless point to consolidation. The Moving Average Convergence Divergence (MACD) sits close to zero with flat histogram readings, and the Relative Strength Index (RSI), at 44.57, suggests little directional conviction.

Confirmation that the recent correction from the highest level since April 2025 has ended requires 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.

Initial downside support lies at 101.25, where the 38.2% retracement converges with the 200-period EMA. Below that, the 50.0% retracement at 100.76 and the 61.8% retracement at 100.25 mark further support levels. These precede the 78.6% level at 99.52 and the previous swing low near 98.59.

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

4-hour DXY chart