US Dollar Index Technical Analysis: Small retreat, broader picture still bullish
The US Dollar Index (DXY) eases a touch on Wednesday. With Fed Chairman Powell confirming that it will take longer than expected to start lowering interest rates, some unwinding of the rally that took place in the DXY since last week’s Consumer Price Index numbers is likely. Expect a bit of a pullback, although the substantial wider rate differential between higher US rates and the rest of the world should keep the DXY at higher levels above 104.00.
On the upside, the fresh high of Tuesday at 106.52 is the level to beat first. Further up and above the 107.00 round level, the DXY Index could meet resistance at 107.35, the October 3 high.
On the downside, the first important level is 105.88, a pivotal level since March 2023, which proved its importance on Monday by holding as a support. Further down, 105.12 and 104.60 should also act as a support ahead of the region with both the 55-day and the 200-day Simple Moving Averages (SMAs) at 104.17 and 103.91, respectively
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