The US Dollar Index may be on the verge of reaching a nearly 18-month high of 102.53, as noted on Monday. The 14-day Relative Strength Index at 75.6 indicates that the asset is currently in overbought territory. The primary support is positioned at the lower boundary of the ascending wedge, approximately 101.70. The US Dollar Index, which measures the value of the US Dollar against six major currencies, is maintaining its position after recording modest gains the previous day and hovering around 102.10 after retreating from nearly 18-month highs during the European hours on Tuesday.
The near-term bias is bullish, with price maintaining its position above both the nine-day and 50-day Exponential Moving Averages, thereby reinforcing a supported structure. The 14-day Relative Strength Index at approximately 75.6 indicates overbought conditions, suggesting that the upside momentum is extended while the overall upward trend continues to hold firm. Furthermore, the technical analysis of the daily chart reveals that the dollar index is trending upwards within an ascending wedge pattern. This suggests that a temporary bullish continuation is in progress; however, a bearish reversal or correction could take place upon reaching the apex of the pattern or breaching its lower support boundary.
The US Dollar Index may encounter preliminary resistance at approximately an 18-month peak of 102.53, attained on October 6, succeeded by the upper limit of the ascending wedge at 102.80. On the downside, the primary support is positioned at the lower boundary of the ascending wedge near 101.70, succeeded by the nine-day EMA at 101.60. A breach beneath this confluence support zone would trigger a bearish reversal, exerting downward pressure on the dollar index, potentially leading it to test the 50-day EMA at 100.37. Further declines would reveal the four-month low of 98.56, recorded on August 20.
Analysts highlight that the latest US services data remain consistent with an economy still expanding, even if momentum has cooled slightly. They note that “the ISM services index eased to 54.9 from 55.4 (consensus 55.0), but remained firmly in expansion territory,” with “business activity and new orders softened” on the month. However, source points out that “stronger employment and order backlogs, alongside a fresh high in prices paid, helped offset the decline,” reinforcing the view that underlying services-sector demand and inflation pressures are still resilient enough to keep the Dollar supported.
