DXY Slides on Opening Day, Downside Limited by Rate Hike Bets

The US Dollar Index (DXY) has been in decline since the start of the week, eroding part of its strong gains to a two-week high on Friday. The index currently trades just above mid-99.00s, down nearly 0.15% for the day.

Despite the decline, the downside for the DXY seems limited due to rising bets for an interest rate hike in September, bolstered by Federal Reserve Chair Kevin Warsh's comments at the Jackson Hole Symposium on Friday. The escalating tensions between the US and Iran have also contributed to the safe-haven Greenback's strength.

From a technical perspective, the recent recovery from the lowest level since mid-May faced rejection near the 99.70-99.75 confluence, which comprises the 100-day Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the July-August decline.