King Dollar has blasted beyond 100 for the first time since December
The US dollar has been one of the strongest performers in the G8 this month. The Dollar index (DXY), which measures the greenback against a basket of six currencies, extended its rally, surging above the key 100 psychological level amid escalating tensions in the Middle East. Bulls have built steady momentum over the past 48 hours.
The DXY reached a fresh multi-month high of 100.28 during the early European session on Friday before giving up some gains.* This lack of follow-through does not necessarily indicate weakening bullish conviction but may signal a pause in the uptrend after a strong rally.
Macro focus shifts to the US PCE inflation report
Trading volumes remained elevated on the final trading day of the week, with the January Personal Consumption Expenditures (PCE) inflation report expected to provide the final boost to the forex market. The Federal Reserve's preferred inflation indicator, the PCE index, offers up-to-date information on price trends; however, the January figures do not account for the impacts of the conflict in the Middle East. The core PCE rate is expected to rise from 3.0% to 3.1%, while headline PCE inflation is anticipated to remain steady at 2.9%.
DXY: 100.40 back in focus
The DXY has so far encountered resistance near 100.40 again and currently trades below 100.20.* The 100.40 level remains a key resistance point to watch in the coming days. A successful break above this threshold would clear the way for bulls to target 100.90–101 in the short term. However, the index’s 4-hour chart shows mixed signals. Despite the recent strong rally, there is a possibility of a short-term correction if the index fails to surpass 100.40 again, potentially dropping to around 100.00–99.80.
* Past performance is no guarantee of future results.
