US Dollar Index Price Forecast: Remains bearish near 103.50 despite recent recovery

• The US Dollar Index recovers some lost ground to near 103.50 in Wednesday's early European session, adding 0.21% on the day. 
• The negative outlook of the index remains intact below the 100-day EMA with a bearish RSI indicator. 
• The initial downside target to watch is 103.20; the first upside barrier is seen at 104.10. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, attracts some buyers to around 103.50 during the early European session on Wednesday. Traders brace for the Federal Reserve (Fed) interest rate decision later on Wednesday, with no change in rate expected.

The new economic projections from Fed officials will be closely watched as they might offer some hints about how policymakers view the likely impact of US President Donald Trump administration policies.

Technically, the bearish outlook of the DXY remains in place, characterized by the index holding below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance is to the downside as the 14-day Relative Strength Index (RSI), which stands below the midline near 31.15, supporting the sellers in the near term. 

In the bearish event, the low of March 18 at 103.20 acts as an initial support level for the USD index. The crucial contention level to watch is 102.00, representing the psychological level and the lower limit of the Bollinger Band. Extended losses could see a drop to 100.53, the low of August 28, 2024. 

On the bright side, the immediate resistance level for the DXY emerges at 104.10, the high of March 14. Further north, the next hurdle is seen at 105.45, the high of November 6, 2024. Any follow-through buying above this level could see a rally to 106.10, the 100-day EMA.

US Dollar Index (DXY) daily chart