Technical and Economic Analysis of the US Dollar Index: New Insights

First: Fundamental Factors

1. Consumer Price Index (PCE) Data:

- The core PCE came in higher than expected at 2.8% on an annual basis, indicating increasing inflationary pressures in the US economy.

- The annual CPI came in as expected at 2.5%.

- This data supports the possibility that the US Federal Reserve will maintain its tight monetary policy for a longer period, which could strengthen the dollar.

Second: Technical Factors

- Looking at the attached chart, we note the following:

- The Dollar Index is positioned at 104.375, near a key support area (104.267 - 104.341), which is considered an important area for determining the next trend.

- If this support holds, the index is expected to target the next resistance at 104.933.

- If the pivotal support is broken, the index may head towards the next support level at 103.567.

- The RSI is trading at 51.93, indicating stable momentum with no clear signs of oversold conditions.

Expected Scenario

- With the release of strong inflation data, the dollar may see additional support, enhancing the chance of a rise towards the resistance level of 104.933, especially if the positive sentiment towards hawkish monetary policy continues.

- On the other hand, if the dollar declines below pivotal support, this could open the way for a correction towards 103.567.