The US Dollar Index may experience a rebound toward the nine-day EMA of 102.07. The 14-day Relative Strength Index at 57.40 indicates a favourable and constructive bullish momentum. The DXY may further decline toward the 50-day EMA of 100.87. The US Dollar Index, which measures the value of the US Dollar against six major currencies, is extending its losses for the second successive day and is currently trading around 101.90 during the Asian hours on Friday. The DXY is maintaining a bullish near-term bias as it remains above the 50-day Exponential Moving Average. Price is currently testing the short-term nine-day EMA, which serves as immediate resistance, indicating that the recent advance is experiencing a pause rather than a reversal. The 14-day Relative Strength Index at 57.40 remains in positive territory without indicating overbought conditions, suggesting that bullish momentum continues to be constructive despite the FXS Fed Sentiment Index retreating from previous highs. Furthermore, the technical analysis of the daily chart reveals that the dollar index is situated just beneath the lower boundary of the ascending channel, indicating a decline in bullish momentum and a possible transition toward a downward trend.
Given that the price is marginally below the boundary, it could represent a transient decline or a liquidity search intended to activate stop-loss orders positioned just below support. The US Dollar Index may experience a rebound, potentially testing the initial resistance level at the nine-day EMA of 102.07. A return to the channel would revive the bullish bias and support the dollar index to test the 18-month high of 102.94, reached on October 14, followed by the upper boundary of the ascending wedge at 103.70. On the downside, the US Dollar Index may traverse the vicinity of the 50-day EMA at 100.87. Further declines would reveal the five-month low of 98.56, recorded on August 20. Commerzbank’s Thu Lan Nguyen highlights that a run of stronger-than-expected US data has done little to deliver lasting support for the Dollar. She notes that “surprisingly strong US consumer price data on Wednesday were followed yesterday by stronger-than-expected retail sales and producer price figures,” adding that this sequence “adds to the evidence that price pressures are becoming increasingly broad-based.”
However, Nguyen points out that “the dollar was unable to hold on to its gains from Wednesday,” underscoring that the latest upside surprises in inflation and activity have not translated into a sustained currency rally. Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, pointing to a slightly less impactful tone relative to the established baseline despite broadly consistent messaging since the September FOMC. The admission of being “over-scarred from the global financial crisis” underscores a lingering bias toward risk management and financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” and stresses that upcoming October and December meetings will be the true “crystallizing moment” for decisions on output, employment, and inflation.
Warsh’s focus on AI as a demand-side force that will eventually bolster data confidence and monetary policy, while keeping near-term employment effects uncertain, reinforces a cautious but constructive stance for the Dollar and broader risk sentiment. The FXS Fed Sentiment Index remained stable, registering no change at a high level of 127.51. This indicates that the overarching policy stance continues to be firmly hawkish, even in light of the marginally lower FXS Speechtracker score. In the foreign exchange markets, the interplay between a robust FXS Fed Sentiment Index and Warsh’s focus on price stability alongside financial stability risks indicates continued backing for the Dollar. This outlook remains contingent on forthcoming data and advancements in AI as we approach the year-end FOMC meetings.
