US Dollar Index Price Forecast: DXY holds above 102.00 near two-week high ahead of FOMC

• After reaching a near two-week high on Wednesday, DXY finds little scope to extend its modest intraday advance.
• Ahead of the pivotal two-day FOMC meeting’s outcome, bulls trim positions and move to the sidelines.
• Further gains remain the path of least resistance, according to the supportive technical picture.

At around 102.35, the US Dollar Index (DXY) is trading almost flat on the day, having retreated from the near two-week high reached earlier on Wednesday. The index, which measures the Greenback against a basket of currencies, has slipped as bulls adopt a cautious stance ahead of the pivotal FOMC decision, although the retreat has lacked follow-through.

With the US Federal Reserve (Fed) widely expected to leave interest rates on hold when its two-day meeting concludes, attention is likely to centre on the accompanying policy statement and Chairman Kevin Warsh's press conference. Further indications of the Fed's policy trajectory will be sought by investors and should give the DXY fresh impetus. Thursday then brings key US economic releases: the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

A recent break above the 50-period Simple Moving Average (SMA) on the 4-hour chart, together with a move through the mid-range Fibonacci retracement levels, leaves the index with a positive technical bias. However, the failure to sustain momentum above the 61.8% Fibonacci retracement calls for some caution among DXY bulls considering positions for further gains. Oscillators on the same chart also point to robust, but increasingly stretched, bullish momentum.

Should the pullback extend, the first potential support lies at 102.20, the 50% Fibonacci retracement. Below that sit the 38.2% retracement at 102.02 and the 50-period SMA at 101.88. A more pronounced decline would bring the 23.6% level at 101.81 into view, followed by the structural floor around 101.45. Conversely, renewed gains above the 61.8% retracement at 102.38 could meet immediate resistance around 102.63, the 78.6% level,  before encountering a further cluster of barriers around the previous swing high near 102.95.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

DXY retains a bullish bias on the 4-hour chart