FX.co ★ NewInForex | U.S. Dollar Index (USDX) in Forex Trading

The US Dollar Index (USDX)s Fundamental, Technical and Sentimental Overview (3rd Oct, 25) Fundamental Overview The primary fundamental drivers for the USDX are the US Federal Reserves (Fed) monetary policy and the overall health of the US economy compared to the rest of the world. Currently, the narrative is mixed but leaning towards softening dollarstrength over the long term. Key Drivers: Interest Rate Differentials: While the Feds target rate is currently high, expectations for future rate cuts are growing due to stubborn, but lower, inflation and a slowing labor market. Any dovish stance from the Fed, especially if coupled with hawkish stances from other central banks, tends to weaken the dollar. Geopolitical and Economic Uncertainty: Global risks, such as ongoing trade tensions and geopolitical instability, typically boost the USDs safe-haven status. However, any de-escalation can quickly reverse this. Market Hedging/De-Dollarization: Increased hedging of US assets by foreign investors, or central banks "de-dollarizing" reserves, can create persistent selling pressure on the dollar. Technical Overview: H4 Timeframe

The H4 timeframe focuses on short-to-medium-term price action, which is showing signs of a potential short-term correction within a broader range. Current Price and Key Levels: Current Price: Around 97.82 - 97.85. Immediate Resistance: 98.20 - 98.40. This zone has been a pivot point and corresponds to recent daily highs and minor technical barriers. A decisive H4 close above this could target 98.60. Immediate Support: 97.50 - 97.65. This area includes a recent low and key pivot levels. A sustained H4 break below this level could open a path to the more critical support zone. Critical Support Zone: 97.00 - 97.20. This psychological level is crucial for long-term structure; a break below it would signal a stronger bearish trend continuation. Technical Indicators: Moving Average Convergence Divergence: The MACD line is likely flat or crossing slightly below the signal line near the zero line. This suggests weakening momentum and potential downside pressure in the short-term. Relative Strength Index: The RSI is likely hovering around 40-50. It is not showing overbought or oversold conditions, confirming that the index is in a consolidation or slight corrective phase on this timeframe. Sentiment Overview Sentiment: Market sentiment is mixed to slightly bearish in the short-term. Traders are positioned for potential downside due to the Feds expected dovish pivot, but caution remains due to geopolitical risks. The overall bias is to sell rallies until a clear breakout occurs. Trade Setup Point: The H4 chart suggests a sell-on-rally or a range trading approach. Bearish/Sell Zone: Look for selling opportunities around the 98.20 - 98.40 Resistance Zone. Entry: Wait for a clear H4 bearish candle formation a pin bar or engulfing candle in this zone. Stop Loss: Place above the secondary resistance at 98.65. Take Profit: Target the immediate support at 97.50, and potentially the critical support at 97.20. Range Trading/Buy Zone: A low-risk buying opportunity could emerge if the price tests the 97.00 - 97.20 Critical Support Zone and shows a strong reversal pattern. This is a riskier, counter-trend setup. Note: Successful Forex Trading requires a combination of Technical Indicators, Fundamental Data and Disciplined Risk Management.