Dollar index – a limited correction following the post-Fed rally is likely to pave the way for another upward push.

The dollar gained across the board on Thursday, driven by the widely expected Federal Reserve decision to cut rates by 25 basis points and signal a slower pace of rate cuts in 2025.

US policymakers are fully aware of the current environment, where inflation remains elevated above desired levels and is expected to rise further due to anticipated policies under the Trump administration, which could boost economic growth and fuel inflation.

The dollar index rose by approximately 1.3% in immediate response to the Fed’s comments and approached the key resistance level of 108.04 (two-year high/2024 peak).

The price eased in early Thursday trading due to partial profit-taking following the strong post-Fed rally, as traders reacted to overbought conditions on the daily chart.

A limited correction is expected given increasingly supportive fundamentals for the dollar, which align with bullish technical signals and maintain a positive near-term outlook.

Dips are likely to be contained above the 107.00 zone (Fibonacci 38.2% of the 105.37/107.97 rally), preserving bullish momentum for a renewed push toward 108.04. A breakout above this level would pave the way for testing 108.79 (Fibonacci 61.8% retracement of the 114.72/99.20 downtrend) and potentially trigger a move toward the psychological 110 level.

In an alternative scenario, a deeper correction is possible if the 107.00 level is breached. However, overall bullish sentiment would remain intact as long as the price holds above 106.70 (daily Kijun-sen).

Res: 107.97; 108.04; 108.79; 109.06
Sup: 107.36; 107.00; 107.86; 107.60