The US Dollar Index (DXY) is at a critical technical juncture as it hovers just below the 99.40 resistance level, a barrier that has capped recent upside attempts. A sustained break above this threshold could trigger a fresh bullish leg toward the 100.00 and 100.50 zones, according to technical analysts. Over the past sessions, the index has repeatedly tested but failed to close above 99.40, making it a psychological and technical pivot point for short-term traders.
On Wednesday, the dollar paused its rally as US Treasury yields softened and the market lacked major economic releases. OCBC FX Strategist Christopher Wong noted that the pullback reflects cautious positioning ahead of upcoming catalysts. Immediate support is seen at 98.80, with stronger demand near 98.50, while a failure to hold these levels could expose the 98.00 region.
Traders are now squarely focused on two events: the release of the FOMC meeting minutes and the flash PMI readings for services and manufacturing. The minutes will be scoured for any shift in policymakers' tone on inflation persistence and rate adjustments. Simultaneously, the PMI data will offer insight into economic momentum and price pressures. OCBC's Wong emphasized that the combination of these inputs will determine whether the dollar’s recent strength resumes or a deeper correction takes hold.
A hawkish set of minutes coupled with robust PMI figures could reinforce the 'higher for longer' narrative, giving the greenback the fuel needed to finally break above 99.40. Conversely, any dovish signals or signs of slowing activity may accelerate the current pullback, keeping the index range-bound. With no tier-one data due immediately, the market remains in a wait-and-see mode, leaving the DXY vulnerable to headline-driven swings.
