The dollar index remains directionless in post-Fed trading

Wide post-Fed market swings suggest the dollar is still searching for direction, with Wednesday’s long-tailed candle and today’s extended upper shadow indicating a continuation of its range-bound, indecisive movement.

An initial dip below the psychological 100 support level, which saw the dollar hit a 14-month low immediately after the Fed’s decision, was quickly followed by a rise to a one-week high. However, the gains were short-lived, keeping the dollar within its recent range.

Conflicting signals—stemming from a large rate cut on one hand, and a renewed narrative of a soft landing due to the economy’s resilience on the other—have left the dollar in a holding pattern for now.

That said, daily technical indicators remain firmly bearish, supporting the case for a continuation of the broader downtrend, especially after the recent correction (100.38/101.79) concluded.

For bears to gain momentum, a weekly close below the 200-week moving average (100.33) and a decisive break below the 100 level are needed. This would open the door for an extended decline from the June 28 high of 105.78, targeting support around the 99.20 zone (July 2023 higher base) and the 61.8% Fibonacci retracement level at 98.92 (from the 89.15/114.72 uptrend).

Near-term action is expected to remain bearish as long as the dollar stays below the converging 10- and 20-day moving averages (100.91/101.01).

Res: 100.91; 101.01; 101.37; 101.79
Sup: 100.00; 99.86; 99.20; 98.92