U.S. Dollar Index forecast: Bulls eye 103.7 resistance ahead of FOMC meeting
Fed may keep rates unchanged
The U.S. Dollar Index (DXY) price is rebounding from its earlier losses this week, with the latest economic data providing support for further upside. After reaching a low of 102.80, its weakest level since October last year, the index has recovered, rising 0.4% to 103.35 in today’s trading session. This upward movement follows stronger-than-expected industrial production data, which has reinforced expectations that the Federal Reserve may maintain a firm stance on interest rates.
Industrial production in the U.S. rose by 0.7% month-over-month in February, surpassing market forecasts of 0.2% and significantly outpacing January’s revised 0.3% gain. The data suggests continued economic resilience, adding to speculation that the Fed may delay rate cuts. Market participants are closely watching today’s Federal Open Market Committee (FOMC) meeting, where the central bank is expected to keep rates steady. The focus will be on the Fed’s updated Summary of Economic Projections (SEP) and Chair Jerome Powell’s remarks for insights into future policy direction.
DXY price outlook: RSI signals recovery as industrial data beats forecasts
DXY price dynamics (Feb 2025 - March 2025). Source: TradingView.
On the technical side, the 4-hour RSI has recovered from the bearish territory, moving slightly above neutral, while the daily RSI is rebounding from oversold conditions, indicating the potential for further gains. Key resistance stands at 103.70, a level that has capped the upside since last week. A decisive breakout above this threshold could pave the way for additional strength in the dollar.
If the DXY fails to breach 103.70, near-term consolidation or a slight pullback could be expected. However, with the Fed’s policy stance and economic data favoring dollar strength, the outlook remains constructive for further upside moves. The following key levels to watch include 104.00 and beyond, should bullish momentum persist following the Fed’s announcement.
The U.S. Dollar Index (DXY) fell 0.38% to a five-month low of 102.83. The drop triggered a bearish crossover between the 50 and 100-day EMAs, signaling a potential deeper decline.
