Last Updated on 08/09/2026
- The DXY extends its decline for a second consecutive session, marking losses in four of the past five trading days.
- USD bulls continue to scale back their long positions as the JPY strengthens and markets await crucial US inflation figures.
- Increased expectations for Fed rate hikes, coupled with intensifying US-Iran tensions, could provide renewed support for the safe-haven US Dollar.
Fundamental Analysis
The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, remains under pressure for a second consecutive session, slipping to its lowest level in more than two weeks during Tuesday’s Asian trading hours. The index is hovering around 98.80, down roughly 0.10% on the day. Despite the decline, the DXY remains above the three-month low recorded in August as traders await this week’s key US inflation releases.
The US Producer Price Index (PPI) is due on Thursday, followed by the Consumer Price Index (CPI) on Friday. Both reports will be closely monitored for fresh signals on the Federal Reserve’s policy outlook and could play a decisive role in shaping the Dollar’s near-term direction. At the same time, the sharp appreciation in the Japanese Yen is adding further downward pressure to the DXY after its retreat from a nearly three-week peak reached last Wednesday.
The stronger-than-anticipated US Nonfarm Payrolls report released last Friday has boosted expectations for a potential Fed rate hike at the September 15–16 meeting, particularly as higher energy prices could intensify inflationary pressures. Meanwhile, crude oil prices are trading near their July 24 highs amid growing concerns over prolonged supply disruptions linked to escalating US-Iran tensions around the Strait of Hormuz. The heightened geopolitical uncertainty is keeping a risk premium in oil markets and may provide some support to the safe-haven US Dollar.
USD Outlook Hinges on Upcoming US CPI
OCBC analysts view the latest US jobs report as modestly supportive for the Dollar, but not strong enough by itself to trigger a sustained upside move. The resilient labor market could keep expectations of tighter Fed policy alive and limit further USD losses. However, with wage growth remaining relatively contained, investors may need stronger inflation data before becoming more confident about a September rate hike.
Attention therefore turns to this week’s CPI report. A hotter-than-expected inflation reading could spark renewed demand for the US Dollar, while a softer result would likely leave the Greenback trading in a more volatile, two-way market.
DXY Technical Outlook
The DXY retains a bearish short-term bias while trading below the 200-day Exponential Moving Average (EMA) at 99.52 and the key Fibonacci resistance zone above 99.00. The break below the 61.8% Fibonacci retracement at 99.23 has left the index facing a substantial cluster of overhead resistance, suggesting that any recovery could encounter selling pressure as long as the DXY remains below these medium-term levels.
On the upside, initial resistance stands at 99.23, corresponding to the 61.8% Fibonacci retracement, followed by the 200-day EMA at 99.52 and the 50.0% retracement near 99.72. Further resistance levels are located around 100.20 and 100.80.
On the downside, initial support is positioned near 98.55 at the 78.6% Fibonacci retracement. A break below this level could expose the next major support area around 97.67, where buyers may attempt to halt the decline.
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