US Dollar Index (DXY) Falls to 7-Week Low Ahead of Key Inflation Data
The US Dollar Index (DXY), which measures the USD against a basket of major currencies, has dropped below 97.30 — its lowest level since late July.
The decline reflects market sentiment ahead of crucial economic releases:
→ Wednesday, 15:30 GMT+3: Producer Price Index (PPI) data, following a month that saw unusually high figures.
→ Thursday, 15:30 GMT+3: Consumer Price Index (CPI) data.
These reports are especially significant as the Federal Reserve is scheduled to announce its next interest rate decision next week, with a 25-basis-point cut widely anticipated.
Technical Analysis of the DXY
On 18 August, a descending channel (highlighted in red) was identified on the chart, defined by a series of lower highs and lower lows. This pattern remains valid.
Our baseline scenario suggested the index might test one of the quartile lines (QL or QH) dividing the channel. Since then, the QH line has been tested multiple times (red arrow), clahead acting as resistance.
Potential Scenarios
Bearish Case:
→ Persistent lower highs and lows in the second half of August suggest tradeers dominate the DXY.
→ The black arrow marks a bearish momentum break through 98.05 support last week.
→ The sharp drop indicates an imbalance favoring tradeers, with 98.05 now acting as resistance.
Bullish Case:
→ The DXY has entered the channel’s median zone, where supply and demand often stabilize, attracting potential purchaviewrs.
→ The RSI may form a bullish divergence.
→ The most recent candle shows a long lower wick (bullish pin bar), signaling purchaviewr interest.
Based on these factors, the DXY may hover around the median area in the short term. However, upcoming U.S. inflation reports could trigger market volatility. A test of support near 97.15 is possible.
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