Dollar Index Analysis

• 26 March, 2024 Ruchit Thakur

Dollar Index Analysis

Evening Update: Will the Dollar Index (DXY) continue to increase or decline after hitting 104.00?

Last year, the Dollar Index (DXY) traded near its strong support level of 100.50 to 100.80, but it quickly recovered to 104.50-105.00. This zone provided significant support for the Dollar Index, which the price closely followed before rapidly rising above it. Previously, between February and May, the 100.50-100.80 zone provided consistent support. The DXY rose immediately, trading between 106.50 and 107.00.

The US Dollar Index (DXY) has come under significant selling pressure, falling from weekly highs of 104.50-105.00. We'll go over all of this using a chart and several time frames. Please have a look.

• DXY has a solid support range of 100.50 to 100.80.
• Based on previous trends, the DXY might move to 105.50-107. 
• The chart indicates a possible triple bottom between 100.50 and 100.80, and the DXY has been slowly climbing since testing this key support level. 

Please refer to the chart above, which depicts a crucial support zone. The Dollar Index rose as bulls successfully held the 100.50-100.80 level. As we saw in 2023, the Dollar Index frequently swings horizontally in the 100.50 to 105.50 region. DXY may soon trade between 105.50 and 107.

The previous and current months' CPI data supported dollar bulls, followed by unemployment claims data, and the index rose from 102.20 to 104.50/105.00. Today's CPI numbers helped the Dollar Bulls.

The US CPI rose 0.4% for the month, meeting estimates and up from 0.3% in January. Headline CPI inflation increased to 3.2% year on year, from 3.1% in January. The US core CPI rose 0.4% month on month, exceeding expectations of 0.3%. The headline core CPI rose 3.8% year on year, down from 3.9% in January and less than the projected 3.7% increase.

Based on charts and statistics, we can deduce that the DXY is bullish and will trade in the 105.50-107.00 zone. It may return to the 102.50-102.00 level in the near future, but each down move gives bulls room to drive prices higher into the 105.50-107.00 range.

Please see the Dollar Index weekly chart for support and resistance levels. Every level is represented by a spot chart.