The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, retains a positive bias for the third straight day on Wednesday, though it lacks bullish conviction. The index remains below the 100.00 psychological mark through the first half of the European session as traders keenly await the release of the latest US consumer inflation figures.
The crucial data will be looked upon for cues about the US Federal Reserve’s (Fed) policy path, which, in turn, would provide a fresh directional impetus to the DXY. In the meantime, inflation risks stemming from volatile oil prices keep Fed rate hike bets on the table and remain supportive of elevated US Treasury bond yields. This, along with geopolitical uncertainties, continues to act as a tailwind for the safe-haven US Dollar (USD) and favors bulls.
From a technical perspective, the DXY holds below a dense Fibonacci retracement stack and the 200-period Exponential Moving Average (EMA) on the 4-hour chart. Meanwhile, the Moving Average Convergence Divergence (MACD) stays marginally in positive territory, while the Relative Strength Index (RSI) hovers near 51. This, in turn, points to a modest recovery in momentum that has yet to overcome the prevailing overhead structure.
Hence, it will be prudent to wait for a move beyond the 23.6% Fibonacci retracement level of the slide from the July swing high before positioning for further gains to the 38.2% retracement at 100.26 and the 50.0% level at 100.53. Higher up, the 61.8% Fibo. retracement at 100.79 and the 78.6% level at 101.17 precede the cycle high area at 101.65, while the 200-period EMA at 100.41 reinforces this broader cap.
On the downside, the key support to watch is the Fibonacci anchor near 99.40, where a break would reopen the path toward deeper weakness in the DXY.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
DXY 4-hour chart
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
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