Dollar Index – bears back in charge after recovery falters at key technical hurdles

The dollar index extended losses for the second straight session, weighed by mounting concerns over a potential US government shutdown and reinforced expectations of further Fed rate cuts, which overshadowed the support from last week’s stronger economic data.

The index reversed lower after failing to break above key technical resistances, including the thin daily cloud and the 100DMA, creating a bull-trap formation.

The pullback has already retraced 38.2% of the two-legged recovery from 95.82 (2025 low) and disrupted attempts to form a weekly Doji reversal pattern.

Technical signals on the daily chart have weakened, with the 14-day momentum turning negative and the stochastic emerging from overbought territory, aligning with bearish fundamentals and pointing to more room on the downside.

A sustained move below the 20DMA and Fibo 38.2% support at 97.41/32 would confirm fresh bearish momentum and open the way towards 97.04 (50% retracement) and 96.80 (Sep 23 higher low). Market attention now shifts to the upcoming release of US September labor data, which may provide clearer guidance on the Fed’s policy outlook.

Res: 97.68; 98.08; 98.25; 98.56
Sup: 97.32; 97.04; 96.80; 96.40