The dollar stays on the defensive as expectations grow for a dovish stance from the Fed.

The dollar index remains deep in negative territory in early Monday trading, extending Friday’s 0.93% decline and breaking key support at 101.94 (the August 5 low, marking an eight-month low).

The dollar weakened broadly amid renewed risk appetite and growing expectations for a more dovish stance from the Federal Reserve ahead of two key events this week: Wednesday’s FOMC minutes and Fed Chair Powell’s speech at the Jackson Hole symposium on Friday.

Markets have fully priced in a 25 basis point rate cut in September, with rising bets for a 0.5% cut adding further pressure on the greenback.

A decisive break below the 101.94 pivot would signal the continuation of the broader downtrend, with a drop through nearby Fibonacci support at 101.73 (76.4% retracement of the 100.29 to 106.36 move) reinforcing bearish momentum and exposing targets at 100.29/100.00 (December 2023 low and psychological level).

Strong resistance is seen at the 102.60 area, marked by the falling daily Tenkan-sen and broken 61.8% Fibonacci level, followed by the 103.10 zone (August 13/15 double-top), which should limit any extended upticks.

Res: 102.39; 102.65; 103.10; 103.33
Sup: 101.82; 101.73; 101.01; 100.29