18 Mar 2025

The US Dollar Index (DXY) has experienced an increase, reaching approximately 103.60 during the early European trading session on Tuesday, which represents a 0.14% rise for the day. Despite this upward movement, the index maintains a negative outlook, as evidenced by a bearish Relative Strength Index (RSI). Traders should pay close attention to the primary support level at 103.35, while immediate resistance is identified at 104.10.

The DXY, which gauges the strength of the US Dollar against a selection of six major currencies, has managed to recover some of its earlier losses, approaching the 103.60 mark in the early hours of Tuesday. However, the potential for further appreciation of the US Dollar may be limited due to concerns regarding the economic implications of US President Donald Trump's tariff policies, which could potentially trigger a broader economic downturn.

Market participants are particularly focused on the upcoming interest rate decision from the US Federal Reserve, scheduled for Wednesday, with expectations of no changes to the current rates. According to the CME FedWatch tool, the market has priced in nearly a 60% likelihood of rate cuts, indicating the anticipation of just over two reductions for the remainder of the year.

A review of the daily chart indicates that the bearish sentiment surrounding the DXY remains pronounced, as the index is trading below the critical 100-day Exponential Moving Average (EMA). This downward trajectory is further supported by the 14-day RSI, which is situated below the midline at approximately 31.50, suggesting a preference for sellers in the short term.

The initial support level for the USD index is set at 103.35, which corresponds to the low recorded on March 17. If the index continues to decline, the next support level is expected to be at 102.20, aligning with the lower boundary of the Bollinger Band. Additionally, a further downside threshold to monitor is 100.53, the low from August 28, 2024.

On the other hand, the first resistance level for the DXY is located at 104.10, the peak observed on March 14. A sustained movement beyond this level could potentially lead to an increase towards 106.15, which corresponds to the 100-day EMA. A significant breakthrough above this threshold would indicate a stronger bullish sentiment.