• USD Index struggles to attract any meaningful buyers and remains close to a one-week trough.
• The US-Iran peace deal optimism undermines the safe-haven USD ahead of the Fed rate decision.
• The constructive technical setup warrants caution before positioning for any meaningful downfall.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, consolidates in a narrow band around mid-99.00s through the first half of the European session on Wednesday as traders opt to wait for the outcome of a two-day FOMC meeting. In the meantime, the optimism led by an interim US-Iran peace deal acts as a headwind for the safe-haven buck and keeps it close to a one-week low, touched on Monday.

From a technical perspective, the overnight close below the 23.6% Fibonacci retracement level of the May-June upswing favors bearish traders and backs the case for an extension of the USD's retracement slide from the highest level since late March. Apart from this, a slightly negative Moving Average Convergence Divergence (MACD) reading validates the outlook. However, the Relative Strength Index (RSI) around 53 suggests neutral-to-constructive momentum, hinting that dips may attract buyers.

Moreover, the DXY holds above the 200-day Exponential Moving Average (EMA), which coincides with the 50% retracement level, keeping a mild bullish bias while the broader structure remains supported. Hence, any further decline is more likely to find initial support at the 38.2% Fibonacci retracement at 99.27, ahead of the 200-day EMA near 99.09, with deeper Fibonacci floors lining up at 98.96 and 98.64 if corrective pressure extends.

On the topside, immediate resistance emerges at the 23.6% retracement around 99.67, with a break above this level exposing the recent swing high region near the 0.0% Fibonacci anchor at 100.30.

(The technical analysis of this story was written with the help of an AI tool.)

DXY daily chart