Dollar index – downside risks could intensify if Fed signals the beginning of a policy easing cycle

Bears paused above a fresh 11-week low on Wednesday, as markets awaited the outcome of the Fed’s two-day policy meeting.

The dollar index extended its downtrend from the early August peak around the 100 zone, remaining within the broader bearish cycle that started from January’s high at 110.00, with losses of nearly 12% year-to-date. The latest acceleration lower shaved another 1% off the index over the past two sessions.

Expectations for a 0.25% Fed rate cut today, alongside a strong probability of further easing in the months ahead, continued to weigh heavily on the greenback.

Near-term rebounds are likely to remain capped below 96.80/97.20 (the July 24 low / falling 10DMA), in order to keep broader bearish structure intact.

Key support rests at 95.97 (2025 low posted on July 1). A sustained break here would confirm the end of the 95.97/100.04 corrective phase, open the way for continuation of the larger downtrend, and expose 95.18 (Fibo 76.4% of 89.15/114.72 rally).

Stronger downside pressure, depending on Powell’s rhetoric, could accelerate losses toward the psychological 90.00 handle and 89.15 (2021 low).

Daily technicals remain fully bearish, reinforced by the recent 20/55DMA bear cross, though oversold conditions suggest that periods of consolidation cannot be ruled out.

Res: 96.82; 97.21; 97.42; 97.61
Sup: 96.16; 95.97; 95.01; 94.41