US Dollar Index Price Forecast: Lower Bond Yields Leave DXY Struggling Near 101.75

Lower bond yields and hopes for diplomacy with Iran leave DXY under selling pressure for a third consecutive day.
Further losses could be contained by geopolitical uncertainty and expectations of a Fed rate rise.
With the technical backdrop remaining constructive, buyers could emerge on dips to lower levels.

Down around 0.20% on the day near 101.70-101.65, the US Dollar Index (DXY) sits towards the bottom of its weekly range in the first half of Friday's European session. The index, which measures the Greenback against a basket of currencies, has now extended its post-FOMC pullback into a third consecutive day. Against a mixed fundamental backdrop, it appears set to record a third successive weekly decline.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Disappointing technology earnings fuelled concerns that substantial AI spending might fail to generate adequate returns, prompting investors to seek safety in government bonds and sending US Treasury yields sharply lower. Renewed optimism over a diplomatic resolution to the Middle East conflicts is also weighing on the safe-haven US Dollar (USD). Geopolitical risk nevertheless continues to command a premium: hostilities between the Iran-backed Houthi group in Yemen and Saudi Arabia are intensifying, while the US and Israel have threatened to resume attacks after the US midterm elections. Expectations that the US Federal Reserve (Fed) will raise interest rates again in December could provide additional support for the DXY, helping to contain further declines.

The intraday move below the 23.6% Fibonacci retracement of the August-October advance gives bearish traders the technical advantage and points to scope for further declines. A move below zero in the Moving Average Convergence Divergence (MACD) indicator, accompanied by a negative histogram, also signals easing upward momentum. By contrast, a Relative Strength Index (RSI) reading near 50 suggests near-term consolidation following earlier overbought readings, rather than a clear reversal. Further weakness could therefore meet support at 101.28, the 38.2% retracement, followed by the 50% level at 100.77. The latter is bolstered by the 100-day Simple Moving Average (SMA) at 100.66.

Should the pullback deepen, buyers would probably emerge near 100.26, the 61.8% retracement. A break below that level would bring the 78.6% retracement at 99.53 into view, followed by the Fibonacci anchor at 98.60. Any recovery would initially face resistance at 101.91, the 23.6% Fibo. retracement, before encountering a more substantial barrier around the cycle high near 103.00.

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

DXY on the daily chart

US Dollar Records Its Strongest Monthly Performance Against the Euro

Against the major currencies listed below, the US Dollar (USD) has performed best against the Euro this month. The table sets out its percentage changes over the month.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		1.26%	-1.10%	-0.02%	-1.86%	-1.17%	-0.23%	-1.64%
EUR	-1.26%		-2.33%	-1.29%	-3.09%	-2.42%	-1.47%	-2.85%
GBP	1.10%	2.33%		1.06%	-0.77%	-0.12%	0.88%	-0.46%
JPY	0.02%	1.29%	-1.06%		-1.86%	-1.17%	-0.15%	-1.58%
CAD	1.86%	3.09%	0.77%	1.86%		0.70%	1.73%	0.24%
AUD	1.17%	2.42%	0.12%	1.17%	-0.70%		0.96%	-0.41%
NZD	0.23%	1.47%	-0.88%	0.15%	-1.73%	-0.96%		-1.40%
CHF	1.64%	2.85%	0.46%	1.58%	-0.24%	0.41%	1.40%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and following its row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.