The US Dollar Index (DXY) is gaining momentum, aided by comments from Fed Chairman Jerome Powell, which have lowered market expectations for a significant rate cut in the upcoming November decision. With reduced chances of a large cut, the US Dollar is strengthening, impacting the performance of other currencies in the DXY basket, particularly the Euro (EUR). Additionally, there is growing speculation that the European Central Bank (ECB) may implement a surprise rate cut in October, further widening the rate differential in favor of a stronger US Dollar.
The DXY's recovery appears robust, having already surpassed four previous daily highs during Tuesday’s Asian session. If Dollar bulls maintain this upward trend, the next resistance level to watch is 101.90, followed closely by the 55-day Simple Moving Average (SMA) at 102.22.
On the downside, the level of 100.62 is shifting from resistance to support, provided the DXY closes above it today. The fresh low for 2024 stands at 100.16, which may be tested before any further declines. If the index falls below this level, it could risk breaching the significant 100.00 mark, bringing the July 14, 2023, low of 99.58 into focus.
