Dollar Index at a Crossroads: Can Strong GDP Push DXY Above $101.17?

Market Overview

On August 28, the Euro was pressured after the Eurozone’s M3 Money Supply growth came in at 2.3% year-over-year, in line with expectations but down from the previous 2.7%. Private Loans growth remained sluggish at 0.5%, indicating softer economic activity.

Meanwhile, the U.S. Dollar Index (DXY) held steady, supported by hawkish comments from FOMC member Waller, which helped maintain U.S. 10-year bond yields near recent highs.

US Dollar Index (DXY)

The Dollar Index (DXY) is trading at $101.008, slightly down by 0.11% for the day. The index is hovering just above its pivot point at $100.88, which acts as a critical support level. Immediate resistance is at $101.17, with further barriers at $101.55 and $101.86.

The 50-day EMA sits at $100.99, suggesting short-term stability, while the 200-day EMA at $101.94 indicates stronger, long-term resistance. A descending triangle pattern has formed, extending resistance near $101.17.

This typically bearish pattern could trigger a sharp decline if the index breaks below $100.88. However, if it holds above this level, a bullish reversal may be in play.

US 10-year Bond Yields

The U.S. 10-year bond yield has been fluctuating within a tight range between 3.78% and 3.90%, signalling a tug-of-war between buyers and sellers. Currently, it’s testing a downward trendline near 3.84%, with the 50-day EMA acting as immediate resistance at 3.84%.

A breakout above this level could signal higher yields, often strengthening the U.S. dollar as investors seek higher returns. However, if yields remain capped under this resistance, it could indicate further weakness, potentially softening the dollar’s strength.

EUR/USD Technical Forecast

The EUR/USD pair is currently trading at $1.11255, up 0.15%. The pair remains below the key pivot point of $1.11412, suggesting a bearish outlook unless the price breaks above this level. Immediate resistance stands at $1.11732, with further hurdles at $1.12029 and $1.12368.

On the downside, the first line of support is at $1.11054, followed by $1.10729 and $1.10475. The 50-day EMA at $1.11420 is closely aligned with the pivot point, indicating a critical juncture.

Meanwhile, the 200-day EMA at $1.10599 offers stronger, longer-term support. A move above $1.11412 could shift momentum bullish, while staying below may reinforce the bearish trend.