DXY Eyes Pivotal Support as ECB Preps for Rate Hike

The US Dollar is trading just above pivotal support at around 98.68/69, according to technical analysis from Stonex. The Dollar Index (DXY) has been in a downtrend since July and a break below this threshold could fuel the next leg of the decline. Subsequent support objectives are seen at the yearly open at 98.24 and the 61.8% retracement of the January rally at 97.94.

The focus is on possible inflection off this level, with initial resistance standing at around 99.11/14, backed by the 38.2% retracement of the yearly range and the January swing high.

Eurozone inflation expectations are set to be tested as the European Central Bank prepares to raise rates ahead of US PPI and CPI data releases. With an ECB hike largely priced in, guidance from the central bank may prove more important for the euro's direction.