US Dollar Index – temporary stabilization ahead of possible renewed downside pressure

The dollar index steadied on Monday after nearly a 1% slide on Friday, its sharpest daily drop since Aug 1, triggered by unexpectedly dovish remarks from Fed Chair Powell at the Jackson Hole symposium.

The greenback tumbled as Powell highlighted significant labor market weakness and downplayed inflation as a temporary issue, fueling expectations that the Fed could begin easing its restrictive monetary stance. While Powell refrained from detailing any policy steps, his message was interpreted as strongly negative for the dollar.

The selloff found solid support at 97.53, where the base of the daily Ichimoku cloud aligns with the 61.8% Fibonacci retracement of the 95.97–100.04 rally. Near-term consolidation is likely to remain limited, ideally capped by resistance at 98.06–98.42 (Tenkan-sen / 38.2% Fibo retracement of the 100.04–97.41 decline), to maintain bearish pressure.

A clear break below the 97.50/40 zone (cloud base / Fibo level / prior daily higher base) would confirm continuation of the downtrend, exposing the July 24 higher low at 96.82 and potentially retesting the 2025 trough at 95.97.

Overall, daily technicals remain bearish, with multiple indicators pointing to continued downside risk and reinforcing a negative short-term outlook for the dollar.

Res: 98.06; 98.42; 98.69; 98.88
Sup: 97.53; 97.41; 96.82; 95.97