Dollar Index Stabilizes Above $100.50: Will Upcoming US Data Drive Further Gains?

Market Overview

On August 28, the EUR/USD pair faced downward pressure, trading around $1.1150 as the Dollar Index (DXY) gained 0.18% to $100.77. U.S. Consumer Confidence rose to 103.3, surpassing the forecast of 100.9, which supported the Dollar.

Meanwhile, the U.S. 10-year bond yields remained elevated, hovering near 4.3%, putting additional strain on the Euro.

Eurozone data showed M3 Money Supply growth steady at 2.3%, while Private Loans remained flat at 0.5%, indicating sluggish economic momentum in the Eurozone.

Events Ahead

Looking ahead, markets are focusing on key U.S. data releases schedule on Thursday, including the preliminary GDP growth forecast of 2.8% and Unemployment Claims, also expected at 232K.

Additionally, FOMC member Bostic’s comments later in the day could offer more insights into the Fed’s interest rate trajectory. Any stronger-than-expected U.S. data could further boost the Dollar, pressuring the EUR/USD pair and reinforcing the current bearish outlook.

US Dollar Index (DXY)

The Dollar Index (DXY) is currently trading at $100.779, up 0.18% as it stabilizes just below its pivot point at $101.17. The index has found some support around the $100.53 level, and a double bottom pattern around $100.500 is signaling potential buying interest.

This pattern often indicates that the downside momentum is losing steam, suggesting that the Dollar may see further upside. Immediate resistance is located at $101.55, and a break above this level could push the index toward $101.86.

However, if the price dips below $100.53, the next support lies at $100.28. The sentiment remains bullish above $100.500, but a break below this could trigger a sharper decline.

US 10-year Bond Yields

The US 10-year Treasury yield is currently at 3.83%, showing some consolidation after a recent decline. The yield is testing a key support level near 3.82%, with resistance around 3.86%.

A break below this support could signal further declines towards 3.78%, indicating lower investor confidence in riskier assets. Yields are inversely related to bond prices; hence, if yields drop, bond prices rise, suggesting a flight to safety.

A declining yield often puts downward pressure on the US dollar, as lower yields make the currency less attractive to investors seeking higher returns. Conversely, if the yield rebounds, the dollar could strengthen in response.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.11562, down 0.17% on the day, as the pair hovers just above its pivot point at $1.11507. This level is critical; a break below could push the Euro toward immediate support at $1.11136, with the 50-day EMA at $1.11154 providing a crucial buffer.

If the price breaches this support, the next targets would be $1.10783 and $1.10442.

On the upside, resistance is seen at $1.11954, and a break above could lead to a push towards $1.12297 and $1.12628. The overall sentiment remains bearish below $1.11507, but a move above this pivot could shift momentum in favor of the bulls.