U.S. Dollar Index holds steady near key EMAs as market waits for PCE inflation report
The dollar suffered a sharp 1% decline
The U.S. Dollar Index (DXY) is trading near 99.08 during Friday’s European session, recovering from an earlier low at 98.70 reached in Asia.
Today marks the final trading session of May, and price action is delicately balanced between closing the month in positive or negative territory.
- Dollar trades near key EMAs as traders await core PCE inflation data
- Monthly candle hovers near negative close after Thursday’s 1% drop
- A green close above 99.29 would break four-month losing streak
Yesterday, the dollar suffered a sharp 1% decline, falling from a seven-day high at 99.98 to close at 98.90. The move erased the early weekly gains that began from Monday’s low at 98.25. It also pushed the dollar back below the May opening price at 99.29, shifting the monthly candle into red.
The U.S. Dollar Index price dynamics (April - May 2025). Source: TradingView
However, today’s recovery from the 98.70 low signals some buyer interest ahead of the U.S. Core PCE Price Index release later in the North American session. As the Federal Reserve’s preferred inflation measure, the Core PCE report holds potential to influence expectations around interest rates. Market consensus expects a 0.1% rise following a flat reading in the previous month.
The U.S. Dollar Index outlook hinges on PCE data as price stalls below 99.29 pivot
Technically, today’s intraday rally reached an initial high of 99.18, a 0.36% increase from the Asian low. The price currently trades just below a cluster of resistance formed by the 1-hour 20, 50, and 100 exponential moving averages. This confluence has so far capped further upside and may determine whether the dollar reclaims the monthly open at 99.29 before close.
A break above the EMA cluster would raise the probability of a green monthly close, breaking a four-month losing streak that has defined the dollar’s performance since January. The significance is amplified by the fact that this would be the first green monthly close since Donald Trump took office as U.S. president in January 2025, marking a key psychological shift.
Failure to clear the EMAs could lead to renewed weakness, exposing the 98.70 level again. A close below this point would confirm a fifth consecutive red monthly candle, pointing to a persistent bearish trend through 2025.
While technicals present a key inflection area, today’s PCE data will likely dictate direction. A stronger-than-expected reading may support a bullish breakout above the EMAs. A softer result could pressure the dollar back toward the lows, maintaining the broader downtrend.
The dollar index broke above 99.55 after strong data and tariff ruling lifted demand. RSI stayed below neutral, so momentum slowed before 100.
