US Dollar Index (DXY) remains above 102.00 as bulls appear cautious ahead of key US data

• Dip-buying lends DXY modest support in Asian trading, but further gains prove elusive.
• Concerns over oil-fuelled inflation underpin the USD as expectations of a Fed rate rise persist.
• Ahead of key US data, geopolitical uncertainty adds to demand for the dollar as a safe haven.

With key US economic releases due to provide fresh direction, the US Dollar Index (DXY) remains above the round-number 102.00 mark on Thursday, although its modest rise during Asian trading has struggled to gain traction. The index, which measures the Greenback against a basket of currencies, is still trading near the two-week high reached on Wednesday.

Due later today, the Advance US ADP report and the Personal Consumption Expenditures (PCE) Price Index will be examined closely for indications of the Federal Reserve's (Fed) next policy steps, with markets pricing in the possibility of a December rate rise. Stronger readings would therefore bolster those expectations and lift the DXY. Any initial response to disappointing figures in these market-sensitive releases, however, is likely to be contained following the Fed's hawkish hold on Wednesday.

A 10-2 vote at the close of the October policy meeting left US interest rates unchanged, as widely anticipated. Governor Lisa Cook and Cleveland Fed President Beth Hammack favoured a quarter-point increase. At the subsequent press conference, Fed Chair Kevin Warsh also indicated that the central bank remained alert to persistent inflation and geopolitical risks. Together with continuing geopolitical uncertainty, that stance should underpin the Greenback and lend support to the DXY.

Efforts to revive peace talks have brought a reported letter from US Vice President JD Vance to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, in the latest development in the Middle East crisis. At the same time, US President Donald Trump is threatening renewed military action in the coming weeks. Several Middle East countries and regional allies have been advised by US officials to prepare for a possible short, intense military campaign against Iran following the 3 November midterm elections.

Qatar-led regional mediators are also seeking to bring the US and Iran back to negotiations to avert renewed war. With the geopolitical risk premium nevertheless intact, any corrective decline in the DXY is more likely to attract buyers and prove limited. Before positioning for a continuation of the recent uptrend from September's low towards the October swing high, however, bulls may look for a sustained break above the horizontal barrier at 102.55.

DXY Chart: 1-Hour View

Technical Outlook

During the overnight correction, the index proved somewhat resilient below the confluence around 102.10 formed by the 100-period Exponential Moving Average (EMA) and the 38.2% Fibonacci retracement. Just beneath this lies the 38.2% retracement at 102.09. Further buying interest is evident at the 50.0% and 61.8% retracements, at 101.97 and 101.85 respectively, followed by the 78.6% level at 101.67. On the upside, the first resistance is the 23.6% retracement near 102.25. Beyond that sits the cycle-high anchor around 102.49; a break above it would clear the path for a more pronounced extension higher.

(The technical analysis of this story was written with the help of an AI tool. Know more.)