101.75: US Dollar Index price forecast as DXY struggles near this level while bond yields fall

DXY faces a third consecutive day of selling as bond yields fall and hopes for diplomacy with Iran revive.
Further losses could be contained by geopolitical uncertainty and expectations of a Fed rate increase.
A constructive technical backdrop supports the prospect of buyers returning on dips to lower levels.

The US Dollar Index (DXY) is down around 0.20% on the day. Trading near 101.70-101.65 during the first half of Friday's European session, the index has reached the lower end of its weekly range. The gauge, which measures the Greenback against a basket of currencies, is extending its post-FOMC pullback into a third consecutive day. Mixed fundamental signals leave it looking set for a third straight weekly decline.

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

Disappointing technology earnings prompted investors to seek safety in government bonds, driving US Treasury yields sharply lower. The results fuelled concerns that massive AI expenditure may fail to generate sufficient returns. Renewed hopes of a diplomatic settlement to end the Middle East conflicts are also weighing on the safe-haven US Dollar (USD). Geopolitical risk premiums remain in place, however, as hostilities intensify between Saudi Arabia and the Iran-backed Houthi group in Yemen. Threats by the US and Israel to resume attacks after the US midterm elections add to those risks. Expectations that the US Federal Reserve (Fed) will increase interest rates again in December could also support DXY and contain further losses.

The intraday move below the 23.6% Fibonacci retracement of the August-October advance gives bearish traders an advantage and points to scope for further declines. A move below zero in the Moving Average Convergence Divergence (MACD) indicator, alongside a negative histogram, also signals fading upward momentum. By contrast, the Relative Strength Index (RSI) around 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. Below that lies the 50% level at 100.77, with additional support from the 100-day Simple Moving Average (SMA) at 100.66.

Buying interest would likely emerge near 100.26, the 61.8% retracement, should the pullback deepen. A break below that level would bring the 78.6% retracement at 99.53 into view, followed by the Fibonacci anchor at 98.60. On a recovery, the first resistance is at 101.91, the 23.6% Fibonacci retracement. The cycle high near 103.00 presents a more substantial barrier.

(An AI tool assisted in preparing this article's technical analysis. Learn more.)

DXY: Daily Chart

US Dollar: Monthly Performance

This month's percentage moves in the US Dollar (USD) against the major currencies listed appear in the table below. The US Dollar recorded its strongest performance against the Euro.

	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 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 intersecting cell.