The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 101.10 in the early European trading hours on Wednesday.
The DXY declines as traders have largely priced out expectations of a US Federal Reserve (Fed) rate hike this month following softer-than-expected US June consumer and producer price inflation data
Cleveland Fed President Beth Hammack said on Friday that interest rates may need to rise to beat back persistent inflation. However, markets continue to expect no change to rates at the Fed’s next meeting on July 29, with Fed funds futures pricing an implied 74.9% odds of a rate hold, compared to a 61.5% probability a month ago, according to the CME FedWatch tool. Technical Analysis: In the daily chart, the near-term bias of the Dollar Index Spot is bullish as price holds above the 100-day simple moving average (SMA) and the Bollinger middle band, suggesting ongoing demand on minor pullbacks.
The Bollinger upper band caps the upside in the very short term, while the Relative Strength Index (RSI) at 57 stays in positive territory, hinting at constructive but not overextended momentum. On the topside, immediate resistance is located at the Bollinger upper band near 101.50. A clear break above this level would open the way for the June 24 high of 101.80.