The dollar index continued to decline for the second straight week, hitting its lowest level in almost three weeks on Wednesday.
After the U.S. intervened to support the weakening yen and resumed bond buybacks in late July, the dollar reversed course and entered a downtrend, falling from about 101.48 to around 99.45, where bears found temporary support.
A brief correction was capped at the 38.2% Fibonacci level of the 101.48‑to‑99.45 decline, reinforced by the 100‑day moving average and a bull‑trap pattern on the daily chart. This gave fresh momentum to the broader bearish move, essentially erasing the 99.45‑to‑99.82 recovery.
Daily technical studies now show a full bearish setup, with multiple moving averages crossing bearishly, repeated closes below the 200‑day MA, and 14‑day momentum slipping back into negative territory after a short rally. The preferred scenario targets a break of 99.45 (August higher base), a move that could trigger further declines.
Markets are awaiting the release of the U.S. August inflation report on Friday, which will be a key input for the Federal Reserve’s policy decision next week.
A higher‑than‑expected CPI reading could boost the dollar by raising the odds of another rate hike, though overcoming the prevailing bears will require additional upside momentum.
If the 200‑day MA at 98.96 is broken, it will mark initial resistance, followed by the 10‑day MA at 99.14, guarding the upper break point at 99.60.
Conversely, a firm break below the 99.45 pivot would signal continuation of the bearish trend, completing a failure swing on the daily chart and exposing targets at the weekly cloud base of 97.82 and the April‑May higher base zone around 97.40.
Resistance: 98.96; 99.14; 99.45; 100.00
Support: 98.44; 97.82; 97.40; 96.81
