US Dollar Index Tests 100.99 Resistance as Fed Rate-Cut Expectations Weigh on Momentum

The US Dollar Index (DXY) extended its slide for a second straight session on Friday, trading near 100.60 in early European hours, even as the daily chart keeps the pair inside a broader ascending channel — a setup that may continue to support a constructive medium-term technical outlook.

Technical Picture: Bulls in Control, But Losing Steam

DXY remains above its 50-day Exponential Moving Average (EMA), which is generally viewed as supportive of the broader uptrend. The more immediate hurdle is the 9-day EMA at 100.99, which has capped short-term rallies. The 14-day Relative Strength Index (RSI) sits at 54.2 — just above the neutral 50 mark — a reading often interpreted as indicating mild bullish momentum without overbought conditions. For traders, that reading suggests range-bound price action is more likely in the near term than a decisive breakout.

Key Levels to Watch

Upside: A sustained move above 100.99 could increase the likelihood of a retest of 101.80, the roughly 14-month high set on June 24, with the channel's upper boundary near 102.30 representing the next technical resistance area.

Downside: Primary support sits at the channel's lower edge around 100.30, backed by the 50-day EMA at 99.93. A break below both could weaken the current technical outlook and bring the four-month low of 97.62 from May 6 into focus.

Macro Driver: Fed Repricing

Kevin Warsh, a former Federal Reserve Governor, recently said during the ECB Forum that cooling inflation expectations have eased pressure for near-term tightening, according to Trading Economics data. Market pricing has since reduced the implied probability of a September rate hike to around 50%, down from approximately 64% a session earlier, after June nonfarm payrolls rose by 57,000 — below market expectations, with prior months revised lower.

Why It Matters for Southeast Asian Traders

A softer DXY can help ease funding pressure on USD-denominated debt across ASEAN economies and may provide support for regional currencies and equities, particularly in markets such as Indonesia and the Philippines.

With price trading between 100.30 and 100.99, this range could provide an important reference point for near-term moves in USD/ASEAN currency pairs, alongside upcoming payroll revisions and further comments from Federal Reserve officials.

Technical analysis referenced from FXStreet chart data; macro data via Trading Economics. This content is provided for informational purposes only and does not constitute investment advice.