101.50 area: US Dollar Index price forecast as price tests ascending channel support

101.98 marks the immediate nine-day EMA resistance that the US Dollar Index could test.
At around 55, the 14-day Relative Strength Index points to stable momentum without overbought conditions.
Around 101.70, the ascending channel’s lower boundary provides the nearest support.

101.80 is the approximate level of the US Dollar Index (DXY) during Tuesday’s European session. After recording modest gains, the index is retreating. It tracks the US Dollar (USD) against six major currencies.

Holding above the 50-day Exponential Moving Average (EMA) gives DXY a mildly positive near-term outlook, although the nine-day EMA remains an immediate ceiling. Momentum is stable rather than overbought, with the 14-day Relative Strength Index (RSI) at around 55. Meanwhile, the latest FXS Fed Sentiment Index readings near 127.51 suggest broader policy expectations no longer offer aggressive support, limiting further gains.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The daily chart also shows the dollar index testing the ascending channel’s lower boundary. A bullish rebound from this trendline support could restore the uptrend; failure to hold the level, however, would risk a bearish breakdown.

A recovery in the US Dollar Index could bring the nine-day EMA at 101.98 into focus as the first resistance test. Clearing this short-term average would reinforce the bullish outlook and support a move towards the 18-month high of 102.94, set on 14 October. Beyond that lies the ascending wedge’s upper boundary at 103.90.

The first downside test is under way at around 101.70, where the ascending channel’s lower boundary provides immediate support for the US Dollar Index. The 50-day EMA at 100.94 is the next level below. A deeper decline would leave the five-month low of 98.56, recorded on 20 August, exposed.

5.6/10 Speech Score: Warsh Highlights Investment and AI, Keeps Fed Outlook Data-Dependent

A score of 5.6/10 on the FXS Speechtracker places Fed Chair Warsh’s speech slightly below the historical average of 6.1/10. The reading signals caution despite positive remarks on structural growth and a surge in investment. His acknowledgement of being “over-scarred from the global financial crisis” points to a risk-conscious stance. That tempers the hawkish implications of his emphasis on price stability and the forthcoming “crystallizing” October and December meetings. By highlighting AI’s role as a demand-side force alongside financial stability tail risks, Warsh suggests the Fed welcomes structural optimism but will not commit in advance to a policy course for the remainder of 2026.

With a move of 0.00 points, the FXS Fed Sentiment Index held at a still-elevated 127.51. The unchanged reading indicates that the speech keeps the Fed firmly in hawkish territory, even though its tone was modestly softer than the established FXS Speechtracker baseline. For markets, an elevated index paired with non-committal guidance suggests expectations of prolonged restrictive policy continue to support the Dollar. Data and AI-related developments nevertheless remain crucial to the next policy “crystallizing” moments.

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

US Dollar: Key Questions Answered

US Dollar: Currency Status and Global Role

As the official currency of the United States of America, the US Dollar (USD) also circulates alongside domestic banknotes in a significant number of other countries, serving as their ‘de facto’ currency. No currency is traded more widely. According to 2022 data, it represents over 88% of worldwide foreign exchange turnover, equivalent to average daily transactions of $6.6 trillion. The USD replaced the British Pound as the world’s reserve currency after the Second World War. Gold backed the US Dollar for most of its history, until the Bretton Woods Agreement in 1971 brought the Gold Standard to an end.

Federal Reserve Decisions and Their Effect on the US Dollar

Monetary policy set by the Federal Reserve (Fed) is the single biggest influence on the US Dollar’s value. Achieving price stability, or controlling inflation, and promoting full employment form the Fed’s two mandates. Interest rate adjustments are its main means of pursuing both goals. If prices rise too rapidly and inflation exceeds the Fed’s 2% target, the central bank raises rates, supporting the USD. Conversely, inflation below 2% or an excessively high Unemployment Rate may prompt the Fed to cut rates, putting pressure on the Greenback.

Quantitative Easing: The Mechanism and US Dollar Impact

Printing additional Dollars and introducing quantitative easing (QE) are further options available to the Federal Reserve in extreme circumstances. Through QE, the Fed sharply expands credit flows within a stalled financial system. This unconventional measure addresses a credit drought caused by banks refusing to lend to one another for fear of counterparty default. It serves as a last resort when rate cuts alone are unlikely to deliver the required outcome. During the Great Financial Crisis in 2008, the Fed chose QE to tackle the credit crunch. The process entails printing more Dollars to purchase US government bonds, mainly from financial institutions. The US Dollar typically weakens as a result of QE.

Quantitative Tightening: The Mechanism and US Dollar Impact

By contrast, quantitative tightening (QT) reverses the process: the Federal Reserve halts bond purchases from financial institutions and, as its existing bond holdings mature, does not reinvest the principal in new purchases. The effect is generally supportive of the US Dollar.