US Dollar Index Price Forecast: Remains sticky to 20-day EMA

The US Dollar (USD) trades marginally lower against its major currency peers in Tuesday’s European session, as the appeal of safe-haven assets has diminished due to hopes of a ceasefire between the United States (US) and Iran.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 100.90. S&P500 futures are up 0.45% to near 7,477, reflecting risk-on market sentiment.

The US-Iran ceasefire hopes emerged after Tehran confirmed receiving a 10-day cessation of strikes proposal from mediators to find ways to revive the interim deal with the United States (US). This also led to a steep correction in oil prices.

On the domestic front, investors await the preliminary US S&P Global Purchasing Managers’ Index (PMI) data for July, which will be released on Friday. The Manufacturing PMI is expected to arrive at 54.5, higher than 53.9 in June, while the Services PMI is seen lower at 51.0 from the previous reading of 51.2.

USD Index technical analysis

The Dollar Index Spot trades lower at around 100.90 at press time, but is broadly sideways while remaining sticky to the 20-day exponential moving average (EMA), which is at 100.83. The formation of a Bullish Flag pattern suggests that the overall trend is still bullish, given that its breakout after a consolidation results in the continuation of the upside trend.

The Relative Strength Index (14) near 54.50 suggests balanced momentum, reinforcing a neutral near-term bias as the index consolidates within the recent range.

On the topside, immediate resistance is located at the channel’s upper band near 101.13, and only a sustained break above this level would allow it to revisit the yearly high at 101.80. On the downside, initial demand is seen at the 20-day EMA at 100.83, with the channel floor at 100.23 forming a secondary support zone; a clear move below this latter level would signal a deeper corrective phase within the broader uptrend.