US Dollar Index Price Forecast: DXY falls to 101.75 as outlook appears fragile below 100-hour SMA

• Renewed prospects for diplomacy with Iran bring fresh selling pressure on DXY on Monday.
• With the geopolitical risk premium still in place, Fed rate expectations could cushion the decline.
• DXY must regain the 100-hour SMA for bulls to overturn the negative intraday bias.

At around 101.75, the US Dollar Index (DXY) is down over 0.20% on the day in early European trading, as hopes revive for a diplomatic breakthrough to end the US-Iran war. The index, which measures the Greenback against a basket of currencies, has drawn renewed selling interest at the start of the week, failing to build on Friday's modest rebound from the 101.60 area.

On Sunday, Iranian negotiators reportedly met Qatari mediators for a third consecutive day, putting forward a two-day plan to reopen the Strait of Hormuz on condition that the US meets a set of requirements. Investor confidence also received a boost from US President Donald Trump's remarks that talks with Iran were progressing well and that Iran wanted an agreement. Together, these developments have weighed on demand for the US Dollar (USD) as a traditional safe haven.

Nevertheless, Trump's refusal to rule out further military action after the 3 November midterm elections keeps the geopolitical risk premium in place. Renewed escalation in the Russia-Ukraine conflict and expectations that the US Federal Reserve (Fed) will increase borrowing costs again in December should also support the DXY. With attention turning to this week's key US economic releases, these factors suggest bears should exercise some caution.

Trading below the 100-hour Simple Moving Average (SMA) at 102.10 leaves the index with a bearish intraday bias. The Moving Average Convergence Divergence (MACD) has also edged into negative territory, while the Relative Strength Index (RSI) remains around 41. Taken together, the momentum signals suggest the DXY's attempted rebound is fading rather than developing into a sustained advance.

A move back above the immediate resistance at the 100-period SMA is therefore needed to relieve near-term downward pressure. Initial support lies at 101.60, followed by October's monthly swing low around 101.45. A decisive breach of that lower level would open the way to further declines, taking the DXY further below the 101.00 round number towards support at the 100-day SMA, currently around 100.70.

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

DXY on the 1-hour chart