Dollar Index Analysis

Evening Update: Will the Dollar Index (DXY) continue to increase or fall after hitting the 104.50 resistance zone ?

 

Last month, the Dollar Index (DXY) was trading near a solid support level of 100.50 to 100.80, and it rebounded nicely from there, reaching 104.50. This zone provided considerable support for the Dollar Index, which the price cautiously tracked before surging far beyond it. Previously, from February to May, the 100.50-100.80 zone provided regular assistance. The DXY recovered sharply following that, trading in the 106.50-107.00 range.

 

The US Dollar Index (DXY) has been under some selling pressure, falling from weekly highs at 104.50. We will go over all of this using a chart and several time frames. Please have a look.

 

• DXY has a strong support range of 100.50-100.80.
• Based on recent trends, the DXY could rally into the 105.50-107 range. 
• The chart shows a probable triple bottom between 100.50 and 100.80, and the DXY has been steadily climbing since testing this important support. 

 

 

Please refer to the critical support zone depicted in the chart above. The Dollar Index rose as bulls successfully held the 100.50–100.80 level. As we saw in 2023, the Dollar Index appears to trade largely horizontally in a range of 100.50 to 105.50. DXY could soon trade in the 105.50-107 range.

 

Earlier CPI data boosted dollar bulls, followed by unemployment claims data, and the index jumped from 102.20 to 104.50. Initial Jobless Claims is the number of people who applied for unemployment insurance for the first time in the previous week. This is the most recent US economic data, although market reactions vary from week to week.

 

A reading over forecast is generally negative (bearish) for the USD, whereas a reading below expectation is generally supportive (bullish).

 

 

Please have a look at the chart and understand its significance. The Dollar Index (DXY) is facing short-term supply around 104.50. Any pullback towards the 102.50-103.00 zone would be an excellent chance to go long here in the Dollar Index.

Last week, initial jobless claims rose more than expected. Initial unemployment claims rose by 224K from a week ago. Continuing jobless claims also exceeded estimates.

The number of US citizens claiming unemployment insurance benefits increased by 224K in the week ending January 27, according to the US Department of Labor on Thursday. The amount again outperformed market estimates, following a 215K increase the prior week.

Combining charts and statistics, we can conclude that the DXY is bullish and moving towards the 105.50-107.00 range. It may draw back to 102.50-103.00 zone in the medium term, but each down move provides an opportunity for bulls to push price towards 105.50-107.00 zone appropriately.

 

Please check the weekly chart of the Dollar Index (DXY) for support and resistance levels. Every level is represented by a spot chart.

 

Dollar Index	Support	Resistance
Level 1	100.50	105.50
Level 2	99.50	107.00