Dollar Index Slides Through Critical Support Zone

The dollar index dropped to a two-month low on Monday after finally breaking below the pivotal 99.50 support zone, an area reinforced by the base of the daily Ichimoku cloud and a key trendline that had successfully repelled several recent downside attempts.

The greenback remains under pressure for a second consecutive session as investors increasingly expect the Federal Reserve to leave interest rates unchanged in September. Sentiment has been weighed down by weaker labor market indicators and softer July inflation data, both of which have reduced expectations for further monetary tightening.

The latest decline also pushed the index below the lower boundary of its three-week consolidation range at 99.25-99.95. A sustained move beneath this area confirms the bearish break of the Ichimoku cloud base and trendline support, strengthening signals for a continuation of the decline from the 101.48 peak.

Technical indicators on the daily chart remain firmly bearish, supporting the prospect of further downside toward the next key target at 99.00, where the 200-day moving average coincides with the 61.8% Fibonacci retracement of the 97.44-101.55 rally. A break below this level would expose additional support at 98.67, the May 29 low, followed by 98.41, the 76.4% Fibonacci retracement.

On the upside, the previously broken cloud base has now turned into a solid resistance zone. Any recovery attempts are expected to remain capped below this barrier, keeping the near-term bearish outlook firmly in place.

Res: 99.50; 100.00; 100.16; 100.31
Sup: 99.16; 99.00; 98.67; 98.41