US Dollar Index Price Forecast: Stabilizes below 61.8% Fibo retracement at 99.20

The Euro (EUR) is currently trading at approximately 1.1610 against the US Dollar (USD) during the European trading session on Tuesday. The EUR/USD pair is maintaining a neutral near-term bias as it closely follows the 20-period exponential moving average (EMA) at 1.1601. The US Dollar Index (DXY) has risen by 0.1% to around 99.00, indicating the Greenback's positive performance.

Financial markets anticipate the US Dollar to remain rangebound due to limited downside from a slight improvement in Federal Reserve's interest rate hike expectations, following strong US Nonfarm Payrolls data for August. Additionally, positive remarks from Fed members regarding inflation have restricted the pair's upside potential.

The release of US Consumer Price Index (CPI) data for August on Friday is expected to trigger a significant move in the US Dollar. Meanwhile, the Euro is anticipated to remain within a limited range, awaiting the European Central Bank's (ECB) interest rate decision on Thursday. ABN Amro believes that the ECB's hike is already priced into financial markets.

Currently, EUR/USD is trading at 1.1612, closely aligning with the 20-day EMA, indicating consolidation rather than reversal of recent gains. The Relative Strength Index (RSI) at 54 suggests a neutral-to-positive momentum, signifying that buyers still have a slight advantage. Should the pair fail to hold the 20-day EMA, the initial support level is projected to be the 20-period EMA near 1.1600, where buying interest may arise.

The next significant hurdle for the pair is the August high of 1.1710. The European Central Bank (ECB) sets one of the three key interest rates, the main refinancing operations rate, charged to banks for one-week long loans. An increase in this rate tends to be bullish for the Euro (EUR), as it attracts more foreign capital inflows.

Conversely, a decrease in the rate may weaken the Euro, reducing its attractiveness as an investment vehicle.