US Dollar Forecast: Prices Consolidating Around 50-Day MA as CPI Report Approaches

U.S. Dollar Index – Buyers Stalled at the 50-Day

The U.S. Dollar Index is edging higher on Friday, trading up 0.27% at 98.239, but buyers are meeting resistance right at the 50-day moving average at 98.200. Clearing that level would put the index in a stronger position, but I think any rally from here could be labored given the nearby resistance layers at 98.317, 98.683, and 99.177.

On the downside, the first potential support sits at the Fibonacci level of 97.859, with the index wide open to 97.109 if sellers take control.

Broader Context – Tariffs, Fed Politics, and Yields

This week’s trade headlines have been dominated by President Trump’s “reciprocal” tariffs that came into force on Thursday — 50% levies on goods from Brazil and India, 35% on Mexico, 25% on Canada, and 10% for other countries not on the named list. Markets are still digesting the potential economic drag.

On the monetary front, Stephen Miran has been appointed to the Federal Reserve Board of Governors to replace Adriana Kugler. Traders see him as leaning dovish, and more likely than not, advocating for rate cuts at future meetings. That’s kept the dollar on track for a weekly loss despite Friday’s firmness.

In the bond market, U.S. yields are higher across the curve. The 10-year is at 4.283%, the 30-year at 4.859%, and the 2-year at 3.758%. The uptick in yields is offering the dollar some short-term support, but so far it hasn’t been enough to reverse the week’s overall downward bias.

Technical View – Exact Levels in Play

Immediate resistance remains the 50-day moving average at 98.200. A sustained push above 98.317 would expose the 98.683 zone, followed by the major ceiling at 99.177. On the downside, 97.859 is the first floor, with 97.109 as the next downside target if sellers accelerate. The index is still operating within the broader consolidation seen since mid-July.

Outlook – Waiting on CPI

With next week’s U.S. CPI release on deck, traders will be watching for signs that tariffs are beginning to filter into price pressures. Markets are already pricing in a 93% chance of a rate cut in September and at least two cuts by year-end. For now, the index is holding near resistance, and we’ll see how that plays out — whether buyers can secure a breakout above 98.200 or if pullbacks toward 97.859 start to attract attention.

More Information in our Economic Calendar.