The US Dollar (DXY) pauses at 98.00 as markets await clarity – What's next?

The morning NA session follows a quasi-dead European overnight trading.

This tends to happen when a lack of data adds to the Summer trading when volumes are typically subdued.

The Dollar Index had been in the middle of many headwinds, as per usual. After a stellar July followed by and N-shaped (for nope) downward spiral in the beginning of August, it has been difficult to spot where the Greenback is heading.

Forex volatility tends to calm during summers and lack of decisive trends exacerbate this rangebound trading – When the path is unclear, rangebound trading is typical (particularly in currencies.)

With Markets awaiting more developments after the White House gathered heads from Russia, Ukraine and the EU, the Dollar is forming a temporary bottom around the 98.00 Handle.

This region had already formed the post-Liberation day bottom (quickly broken in May).

The White House meetings went well and the US will now attempt to create a Putin-Zelenskyy meeting.

Donald Trump, the author of the Art of the Deal, is an unpredictable leader but one sure thing, he is a monster negotiator, and this is giving back some confidence in the US.

In our most recent DXY analysis, we mentioned an expectation of a more balanced Dollar as a lack of continuation upwards and a not-broken bottom show indecision.

Let's see if this indecision shall continue, at least to the technical side.

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The US Dollar is holding its low-sloped ascending channel in a 5 day consolidation around the 98.00 handle.

The post-CPI data had created a new offer for the US Dollar as Markets rushed to price the September cut to 97% before the surprising PPI data changed the course of action.

With the future US inflation expectations rising considerably, the fundamental background for the Dollar (like its rate outlook) is more uncertain.

The Daily RSI is way into the Neutral territory and the Daily doji is an indecision one. All of this is also happening right around the 50-Day MA (currently at 98.065).

Let's have a closer look to spot what breakout points could be in play when the action picks up again.

Such indecisive price action doesn’t warrant analysis across many timeframes – it is better in this environment to look at where we see the most.

The Dollar Index is stuck between the 97.60 Support and the 98.50 Resistance Zones.

With the Price action rebounding from the lows of the Daily upward Channel supplemented by the 2H MA 50 acting as support, it seems that the preferred path would be to the upside.

If things were so sure however, the Dollar would have risen already to test the following resistance zone.

Typically, in this environment, it is good to look at the highs (98.30) and lows of the session (97.94) to see where if the action breaks out from there.

To the upside, look at the 2H MA 200 currently at 98.515.

To the downside, look at the 97.60 Support Zone, then the 97.15 July upward pivot.

Levels to place on your DXY Charts:

Resistance Levels

• 98.50 Pivot Zone now resistance (confluence with 2H MA 200)
• Resistance 99.20 to 99.40
• Main 100.00 to 100.50 Resistance

Support Levels

• 2H MA 50 (97.94)
• 97.60 Support
• July Pivot before run-higher 97.15

Safe Trades!