U.S. Dollar Index recovery struggles below 99.8 resistance ahead of PMI impact
The DXY is up 0.25% near 99.4
The U.S. Dollar Index (DXY) is attempting a mild recovery on Thursday after suffering three consecutive bearish daily closes earlier in the week.
As of late European trading, the DXY is up 0.25% near 99.4, recovering a portion of Wednesday’s losses and trimming the weekly decline to around -1.05%. However, technical resistance levels and unresolved macroeconomic concerns are keeping upside prospects limited.
Highlights
• DXY rebounds after three-day decline but faces strong resistance near 99.8
• RSI remains bearish, signaling limited upward momentum
• Moody’s downgrade and macroeconomic uncertainty cap dollar strength
The recovery began in the late hours of Wednesday’s North American session and extended through the Asian trading session into Europe. Price held above the previous session low at 98.86 and found support during relatively quiet price action overnight. The DXY reached an intraday low of 99.01 before grinding higher toward 99.4 during the European session.
U.S. dollar index price dynamics (Dec - May 2025). Source: TradingView
Despite today’s move higher, the path upward is constrained. Price is now approaching resistance near 99.55, and above that lies the 20-day exponential moving average at 99.8. These two levels form a short-term barrier that coincides with declining RSI momentum. The daily RSI is still stuck in bearish territory near 45, suggesting the current bounce may struggle to evolve into a broader trend shift. If the DXY fails to clear these levels, the next near-term downside target is the prior day’s low at 98.86, where sell-side liquidity is likely to be concentrated.
DXY short-term trend remains fragile without shift in risk appetite or data surprise
The broader weakness this week was driven by sentiment shifts on the fundamental front. Investor confidence in the dollar has been shaken by Moody’s downgrade of U.S. credit outlook, adding to pressure already stemming from a lack of clarity on trade negotiations and tariff policy direction. These uncertainties have caused traders to price in more risk premium across dollar-denominated assets.
Today’s direction may also hinge on fresh PMI data. The Flash Manufacturing PMI is projected at 49.9, slipping below the 50 expansion mark and lower than last month’s 50.2 reading. The Flash Services PMI is forecast to edge up to 51 from 50.8. Any downside surprises in these figures could revive concerns about economic slowdown and limit the scope for further dollar recovery.
In summary, the DXY's rebound after sharp losses but faces meaningful overhead pressure from both chart levels and economic uncertainty. Unless key data or fundamental tone shifts positively, today's gains could be temporary within a broader downward trend.
The U.S. Dollar Index fell below key support amid Moody’s downgrade and rising debt concerns. RSI approached oversold territory as the index extended its three-day losing streak.
