US Dollar Index Forecast: DXY Remains Bearish as It Tests Key 98.00 Support Level

US Dollar Index Forecast: Bearish Outlook Strengthens as DXY Approaches 98.00

The US Dollar Index (DXY) continues to drop on Thursday, falling to 98.35, its lowest level in seven weeks, as the market leans toward Federal Reserve (Fed) rate cuts later this year. A 0.26% daily drop reflects persistent selling pressure in the early European session, driven by soft inflation data and global trade uncertainty.

Bearish Technical Indicators Dominate

From a technical standpoint, DXY remains under strong bearish control:

• The index stays below the 100-day Exponential Moving Average (EMA).
• The 14-day Relative Strength Index (RSI) hovers at 38.80, confirming downside momentum.
• A daily close below the 98.10–98.00 support zone would open the path to 97.70 (March 30, 2022 low) and possibly to 96.55 (February 25, 2022 low).

What’s Driving the US Dollar Decline?

• Fed Policy Expectations: Recent soft CPI data reinforced speculation of a Fed rate cut by September.
• US Producer Price Index (PPI) and weekly Initial Jobless Claims will be closely watched for additional policy clues.
• Trade War Risks: Continued uncertainty around tariffs, particularly those linked to US-China trade tensions, adds to the negative sentiment around the Greenback.

Key Technical Levels to Watch

• Support Levels:
  • 98.10–98.00 (Bollinger Band low and psychological zone)
  • 97.70 (March 30, 2022 low)
  • 96.55 (February 25, 2022 low)
• Resistance Levels:
  • 99.38 (first upside hurdle)
  • 100.00 (round-number resistance)

Related Reads on Tredu:

• PPI Inflation Preview: Will It Confirm a Fed Rate Cut?
• US Dollar Index Breaks Key Support Zone
• How Trade Wars Shape USD Movement