Key Points
- USDX rose 0.10% to 98.78, on track for a weekly gain.
- Traders await CPI data, postponed due to the U.S. government shutdown.
- Focus turns to the Trump–Xi summit next week and upcoming Fed rate decision.
The U.S. dollar index stabilised just below the 99.00 level on Friday, supported by cautious sentiment ahead of the crucial U.S. inflation report, which could help determine the near-term direction for interest rates.
The inflation report, delayed due to the ongoing government shutdown, is expected to confirm that price pressures remain sticky, though not strong enough to derail expectations of a rate cut at next week’s Federal Reserve meeting.
However, a hotter-than-anticipated reading could influence the December policy outlook, reducing the likelihood of further easing into year-end.
Market Context
Beyond U.S. data, traders also focused on geopolitics as the White House confirmed the Trump–Xi meeting scheduled for next week in South Korea. U.S. and Chinese trade negotiators are set to hold preparatory talks in Malaysia this weekend, potentially setting the tone for a breakthrough in tariff discussions.
Meanwhile, the dollar was headed for its largest weekly advance against the yen, underpinned by rising expectations of fiscal stimulus in Japan following recent political developments.
The euro and pound also softened, with both currencies pressured by subdued risk appetite and diverging central bank paths.
Technical Analysis
The U.S. Dollar Index (USDX) edged higher to 98.78, gaining 0.10% as the greenback steadied following a week of mixed macroeconomic signals.
Traders remain cautious ahead of key U.S. inflation and consumer spending data, with the dollar drawing mild support from safe-haven demand amid lingering uncertainty over global growth and geopolitical tensions.
From a technical perspective, the index is gradually recovering from its early October lows near 95.82, maintaining a short-term upward bias.
Price action has stabilised above the 30-day moving average, while the 5- and 10-day MAs are showing early signs of convergence, an indication of building bullish momentum.
However, the index continues to face stiff resistance near the 99.00–99.20 zone, where previous rallies stalled. A break above this range could open the path toward 100.00, while immediate support lies at 98.00, followed by 97.20.
The MACD indicator suggests a modest bullish tone. The MACD line remains above the signal line, and while histogram bars have narrowed, they still reflect positive momentum.
This supports the view of gradual strengthening rather than a sharp rebound.
Outlook
The dollar’s direction now hinges on Friday’s U.S. CPI release and its implications for the Fed’s October 29–30 policy meeting.
A softer print could reinforce rate-cut bets, while any upside surprise may push traders to scale back expectations of additional easing in December.
