The US Dollar Index (DXY) is in a delicate dance, teetering between the 99.50 supply zone and a two-month high. This week, the DXY has been a rollercoaster, with geopolitical tensions and economic indicators taking center stage. The Israel-Lebanon truce has taken a bite out of the DXY's safe-haven appeal, prompting some profit-taking. Meanwhile, the ongoing US-Iran standoff over nuclear programs and the Strait of Hormuz keeps the Middle East on edge, adding to the uncertainty. Oil prices, a key inflation driver, are rising, which could push the US Federal Reserve (Fed) to hike rates, potentially supporting the DXY. However, the index is struggling to break through the 61.8% Fibonacci retracement level from the March-May downfall, a key resistance point. This technical hurdle, combined with the RSI hovering around 61 and a mildly positive MACD, suggests a cautious approach for bulls. The immediate upside is capped at 99.50, and a breakthrough here could unlock further gains towards 100.00 and 100.65. On the flip side, support levels are at 99.14, 98.78, and 98.72, with a deeper pullback exposing 98.35 and 97.63. This week's performance against major currencies highlights the DXY's strength against the New Zealand Dollar, while the Euro, British Pound, Japanese Yen, Canadian Dollar, Australian Dollar, and Swiss Franc have all shown losses. The DXY's trajectory remains uncertain, with bulls awaiting a decisive breakout, but the market's volatility and the interplay of geopolitical and economic factors make it a fascinating yet challenging prospect.
