DOLLAR INDEX – Short-Term Consolidation Underway, Though Sellers Remain in Control Beneath 100
The Dollar Index continues to trade in a narrow consolidation range above a seven-week low, maintaining a bearish bias after last week’s sharp 1.5% decline.
Recent price action has been supported by a key confluence zone around 99.50, where the base of the daily Ichimoku cloud, the 50% retracement of the 97.44–101.55 rally, and the 100-day moving average provide solid support.
Technical indicators on the daily chart remain largely negative. Strong downside momentum and a series of bearish moving-average crossovers continue to weigh on sentiment, while the current period of consolidation reflects ongoing uncertainty surrounding developments in the Middle East. Although reports point to renewed peace discussions, market participants remain cautious.
The dollar could face additional downside pressure if diplomatic efforts prove successful, as easing geopolitical tensions would likely reduce inflation risks and diminish expectations for further Federal Reserve tightening. However, the collapse of previous US-Iran agreements serves as a reminder that negotiations remain vulnerable to setbacks.
The near-term outlook remains bearish while the index stays below the psychological 100 level, which has now turned into resistance and is reinforced by the broken 38.2% Fibonacci retracement of the 97.44–101.55 advance.
A decisive break below the 99.50 support zone, including trendline support at 99.43, would signal a continuation of the broader decline. Such a move would also complete a double-top formation at 101.55/101.48 on the daily chart, opening the way toward 99.00, where the 200-day moving average and the 61.8% Fibonacci retracement converge, followed by 98.41 at the 76.4% retracement level.
On the upside, a sustained recovery above the 100 barrier would ease immediate bearish pressure, although stronger bullish confirmation would require a break and close above the 55-day moving average at 101.23.
Res: 99.90; 100.00; 100.23; 100.52
Sup: 99.50; 99.26; 99.00; 98.41
