The US Dollar Index (DXY) is in a delicate dance, teetering between the 99.50 supply zone and a two-month high. This week, the DXY has been a rollercoaster, with geopolitical tensions and economic indicators keeping traders on their toes. The Israel-Lebanon truce has taken a bite out of the DXY's safe-haven appeal, prompting some profit-taking. Meanwhile, the ongoing tensions between the US and Iran over nuclear programs and the Strait of Hormuz continue to simmer, adding to the uncertainty. The Middle East's volatile nature, coupled with rising oil prices, is fueling inflation fears and pushing the US Federal Reserve (Fed) towards a potential rate hike, which could be a double-edged sword for the DXY. The index is currently grappling with the 61.8% Fibonacci retracement level from the March-May downfall, with a near-term bullish bias supported by the USD's position above the 200-period Simple Moving Average (SMA) and the 50% Fibonacci level. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) further reinforce this positive outlook. However, the immediate upside is capped by the 61.8% Fibonacci hurdle at 99.50. A breakthrough above this level could unlock additional gains, targeting the 78.6% level at 100.00 and the recent swing high at 100.65. On the flip side, support is found at the 50% retracement near 99.14, followed by a cluster of levels at 98.78 and 98.72. A deeper pullback could expose the 23.6% retracement at 98.35 and the structural floor at 97.63. This week's performance against major currencies highlights the DXY's strength against the New Zealand Dollar, while the Euro, British Pound, Japanese Yen, Canadian Dollar, Australian Dollar, and Swiss Franc have all shown varying degrees of weakness. The table and heat map provide a comprehensive view of these currency movements, offering insights into the global economic landscape and the DXY's role as a benchmark.
