US Dollar Index Price Forecast: DXY bulls await trading range breakout above 100.00

The US Dollar Index (DXY) is currently experiencing a bullish trend, with traders eagerly anticipating a break above the 100.00 psychological level. Following a dip from the post-CPI low, the Index has continued its weekly uptrend for four consecutive days, reaching a two-week high during Thursday's European trading session. The Consumer Price Index (CPI) report, released on Wednesday, remained in line with market expectations, allowing the Federal Reserve (Fed) more flexibility to keep interest rates unchanged.

However, concerns about inflation persist due to volatile oil prices, and traders believe there is a greater likelihood that the US central bank may raise borrowing costs at least once before the end of the year. Additionally, the US-Iran conflict contributes to a geopolitical risk premium, providing support for the safe-haven US Dollar (USD).

From a technical standpoint, traders view the recent move above the 50-period Simple Moving Average (SMA) and the 23.6% Fibonacci retracement level of the July-August decline as crucial triggers for DXY bulls. Momentum indicators also support the case for a near-term appreciating move, with the Relative Strength Index (RSI) at 58.50 indicating a bullish trend without overbought signals, and the Moving Average Convergence Divergence (MACD) remaining slightly positive, suggesting that buyers continue to dominate.

Nonetheless, it is advisable to wait for a breakout above the top boundary of the current short-term trading range before positioning for further gains. Should this occur, the DXY could ascend to the 38.2% Fibonacci retracement level at 100.26, followed by the 50.0% retracement at 100.51 and the 61.8% denser barrier at 100.77.

A sustained break above these levels would open the path toward the 78.6% retracement at 101.14 and the recent cycle high around 101.61. Conversely, a pullback to the 23.6% Fibonacci retracement at 99.94, or even deeper to the structural low around 99.42, would be possible. Throughout the week, the table below displays the percentage change of the US Dollar (USD) against major currencies. The US Dollar emerged as the strongest against the New Zealand Dollar.