United States Dollar Index Price Forecast: Bulls await US CPI and breakout above 100.00
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 US Dollar Index (DXY) maintains a cautious upward trajectory for the third consecutive day on Wednesday, though it remains below the critical 100.00 level during the initial half of the European session. Market participants are now eagerly anticipating the release of the latest US Consumer Price Index (CPI) data, which will provide valuable insights into the Federal Reserve's (Fed) policy direction.
The CPI, a key economic indicator, measures inflation by aggregating the prices of a basket of representative goods and services on a monthly basis. A high reading generally supports the US Dollar (USD), while a low reading tends to weaken it. The Fed, tasked with balancing price stability and employment, has been aggressively targeting inflation at around 2% year-over-year, a challenge exacerbated by supply-chain disruptions and inflationary pressures.
In the near term, the DXY remains confined below a significant Fibonacci retracement stack and the 200-period Exponential Moving Average (EMA) on the 4-hour chart. Technical analysts recommend waiting for a breakthrough above the 23.6% Fibonacci retracement level before considering further upward moves towards the 38.2% retracement at 100.26 and the 50.0% level at 100.53.
On the downside, a break below the Fibonacci anchor near 99.40 could open the door for a deeper downturn in the DXY.
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