Dollar Index Holds Within Extended Range as Investors Await Fresh Directional Signals
The dollar was firmer during Asian and European trading on Tuesday, partially recovering Monday’s 0.36% decline, though near-term price action remains confined within the recent congestion range of $97.40/$98.22 as investors await fresh directional signals, primarily from Middle East peace talks.
Technical indicators on the daily chart remain largely negative, with moving averages in full bearish alignment and several bear-cross formations, alongside weak momentum studies. However, these signals are partly offset by Friday’s long-tailed Doji candle, which highlighted strong rejection of lower levels, while downside attempts continue to be limited by the base of the rising and thickening daily Ichimoku cloud at $97.80.
Renewed strength is focusing on initial resistance at the $98.20 zone, the top of the near-term range and reinforced by the sideways daily Tenkan-sen. A break above this level would ease immediate downside pressure and open the way toward stronger barriers at $98.57 (38.2% Fibonacci retracement of $100.48/$97.40), $98.82 (daily cloud top), and $98.94 (50% retracement / daily Kijun-sen).
Otherwise, downside risks would remain in play, particularly if the index stays trapped within the current range. A firm break below the cloud base would be needed to generate a fresh bearish signal and expose the next targets at the $97.30 area, marked by Friday’s spike low, the 61.8% Fibonacci retracement of $95.38/$100.48, and the lower 20-day Bollinger band.
Geopolitical developments are expected to remain the key driver. The greenback could face renewed pressure if positive progress emerges in the region through continued peace talks, an extended ceasefire, or a potential agreement, as that would reduce safe-haven demand for the dollar, ease fears of stronger inflationary pressures, and potentially shift expectations around the Federal Reserve’s recent tightening stance.
Res: 98.15; 98.30; 98.52; 98.82
Sup: 97.91; 97.50; 97.75; 97.31
