US Dollar Index Struggles Below 98.50 Amid Bearish Momentum

US Dollar Index Remains Bearish Despite Rebound to 98.25

The US Dollar Index (DXY) rebounded slightly on Friday to 98.25, snapping a two-day decline during the early European session. The upward move reflects risk-off flows following heightened tensions in the Middle East, which prompted some flight to safety into the US Dollar.

Bearish Technical Outlook Still Intact

Despite this rebound, the bearish outlook for the DXY remains firmly in place:

• The 100-day Exponential Moving Average (EMA) continues to act as a strong resistance level.
• The 14-day Relative Strength Index (RSI) remains below 50, currently at 39.50, signaling downward momentum.
• The price action still hovers within a bearish trend channel.

Key Technical Levels

• Immediate support is seen at 98.00, which coincides with the lower Bollinger Band and a psychological level.
• Next key support lies at 97.61, the June 12 low.
• Deeper downside could target 96.55, last seen in February 2022.
• On the upside, initial resistance is located at 99.38, a technical barrier that must be broken for a bullish reversal.

Related: USD/JPY Faces Headwinds Despite Risk-Off Sentiment

Geopolitical Tensions Drive Risk Sentiment

Safe-haven demand for the USD is temporarily boosted by mounting Middle East tensions, particularly due to escalations between Israel and Iran. However, unless the DXY reclaims levels above the 100-day EMA, the broader trend favors the bears.

Conclusion

While the DXY enjoys a short-term bounce, the technical structure remains bearish. Traders should closely watch the 98.00 support and monitor developments in global risk sentiment and US economic indicators for the next directional cue.