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

The US Dollar Index (DXY) showed slight positive movement during Tuesday's European trading session, edging higher to around 98.95. US Dollar (USD) emerged as the strongest currency against the New Zealand Dollar, as indicated by the heat map displaying percentage changes between major currencies. This positive trend in the Dollar Index was tempered by traders' increased anticipation of hawkish Federal Reserve (Fed) actions following the release of strong U.S. Nonfarm Payrolls (NFP) data on Friday.

Commerzbank noted that the stronger-than-anticipated U.S. employment report reignited expectations for a September Fed rate hike, with Fed funds futures raising the probability to 62%, up from 51% prior to the employment report. This week, key catalysts for the US Dollar will be the U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) reports for August, scheduled for release on Thursday and Friday, respectively.

Deutsche Bank economists emphasized that the August CPI print will be closely watched, with a headline increase of +0.38% MoM against the previous +0.07%. Core CPI is anticipated to rise by +0.21% compared to +0.22%. In the daily chart, the Dollar Index Spot is trading at 98.97, demonstrating a bearish near-term bias as it trades below the 20-day Exponential Moving Average (EMA) at 99.37 and the 61.8% Fibonacci retracement level at 99.21.

The Relative Strength Index (14) is near 41, indicating subdued upside momentum, while the index remains below the overhead cluster of resistance levels. Potential resistance points include the 61.8% retracement at 99.21, the 20-day EMA at 99.37, and the 50% retracement at 99.70. Further gains could target 100.20 and 100.81, the next Fibonacci barriers.

Downside support is found at the 78.6% retracement near 98.50, with a deeper support level at the prior swing low and the 100% retracement at 97.60, where buyers may attempt to curb additional declines.