USD Index – bulls consolidate control ahead of key US economic data releases

The dollar index opened the week with a bullish gap and advanced to a three-and-a-half-week high on Monday, maintaining a firm tone at the start of the new year.

Heightened uncertainty surrounding the US attack on Venezuela supported safe-haven demand for the dollar, while the greenback also drew strength from expectations that key US data due this week (manufacturing and services PMIs and December labor figures) may come in stronger than forecast. Such outcomes would reinforce confidence in the resilience of the US economy and reduce pressure on the Federal Reserve to pursue further monetary easing.

The technical outlook on the daily chart improved after the index broke above the top of its recent consolidation range at 98.40, reinforced by the 100DMA, and challenged the pivotal Fibonacci barrier at 98.41 (38.2% retracement of the 100.32/97.39 decline), where bulls have so far met resistance.

A sustained break above this zone is required to generate a fresh bullish reversal signal and open the way for a stronger recovery. Further extension through the 200DMA at 98.71 and the 50% retracement at 98.85 would confirm the signal and expose upside targets at 99.20/30 (Fibo 61.8% / December 9 lower top).

On the downside, failure to break higher would likely keep the index within an extended consolidation, though the near-term bias remains constructive while the price holds above key support at 98.08 (the base of the thick daily cloud and broken Fibo 23.6% of the 100.32/97.39 pullback).

From a broader perspective, the dollar index continues to trade within a wider consolidation band between 95.82 and 100.32, following the sharp selloff in the first half of 2025 when the index lost around 9.5%.

Res: 98.85; 99.00; 99.30; 99.63
Sup: 98.23; 98.08; 97.91; 97.58