Greenback consolidates below 100 as traders await new catalyst

The US dollar index, which measures the currency against six major peers, has relinquished a significant portion of its post-NFP gains. Nevertheless, the greenback remains near fresh two-month highs.

Last week, the US dollar demonstrated notable strength, advancing from 99.50 to reach a high of 100 following the release of a strong US jobs report. However, after touching the 100.00–100.20 range, the dollar experienced a pronounced pullback, indicating a consolidation phase in the recent uptrend. The index declined for the second consecutive day, testing short-term support near 99.70 before rebounding close to the 100 level.

DXY Momentum Softens as Middle East Tensions Ease

The DXY reached a fresh weekly high of 100.20 during Monday’s early European session before giving up some gains. The bullish momentum waned as markets assessed developments in the Middle East conflict. Tensions eased following an agreement between Iran and Israel to de-escalate strikes after a call from US President Donald Trump. Market attention now shifts to the upcoming US Consumer Price Index (CPI) data for May, a key economic indicator that will influence expectations regarding Federal Reserve interest rate decisions.

Dollar Index (DXY) Technical Analysis

The currency pair delivered very choppy price action so far this week as the pair took a short pause near the psychological level 100.00, which is likely to give way over the next few sessions. From a technical standpoint, the immediate nearest support level is located at 99.70. In case it breaks below this level, it will head towards the next support level, which is located near 99.40, which is the key support area for this week. In other words, this is an area where we could see a lot of interest in the market, so we will have to pay close attention to it. Conversely, a sustained break and close above the 100.00 resistance could propel the DXY higher toward the 100.30–100.40 range.

 

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