U.S. Dollar Index hovers near 100 as yields retreat after soft retail sales
U.S. Dollar Index under pressure
The U.S. Dollar Index (DXY) is facing renewed downside pressure this Friday, following a soft set of macroeconomic releases that have triggered a notable pullback in Treasury yields and subdued price activity across the dollar board.
The index is trading near the key 100 psychological support after a muted 0.15% daily decline so far today.
The price movement comes in response to softer-than-expected U.S. Retail Sales and cooling producer inflation data published on Thursday. These data points prompted a drop in the 10-year U.S. Treasury yield from its monthly peak of 4.55% down to 4.40% during the European session on Friday.
DXY price dynamics (April - May 2025). Source: TradingView
On the technical front, price action is compressing between 100.7 resistance and the 100.0 base support, which is reinforced by the 20-day EMA. DXY has been trapped in this narrow range since midweek, following a failed attempt to sustain gains above $101.50 earlier this week. A decisive break outside this band will shape the next leg in the dollar direction.
The U.S. Dollar Index short-term trend is questioned as RSI turns bearish
Momentum indicators are already leaning bearish. The RSI on both the 4-hour and daily chart has now crossed into negative territory, suggesting a shift in price momentum. However, the broader bearish trend will only be confirmed once index breaks below the 99.67 market structure level. Until that happens, traders may still treat the current weakness as part of a deeper pullback within a recent short-term uptrend.
While the Fed is still broadly expected to hold interest rates steady over the next two policy meetings, the market is beginning to weigh the weakening economic pulse more carefully against the Fed's hawkish rhetoric.
Technically, to the downside, 99.67 is the key invalidation level for bulls, while a sustained move above 100.7 will be needed to revive short-term bullish sentiment. For now, the dollar stands at a decision point, closely tracking both yield movements and the next wave of macro data.
DXY traded quietly above 100.0 as traders waited for key U.S. data and Powell’s speech. RSI stayed flat and price volatility compressed near a key psychological level
