US Dollar Index Seeks Resistance at 100-101 Amid September Volatility

The US Dollar Index (DXY) has rebounded towards resistance around 100-101, but its September seasonality offers little directional guidance. Historically, volatility has been elevated in this month, and with ISM services and NFP approaching, traders face another potential volatility event.

Average September returns for the DXY are minimal at 0.1%, while the median is even lower at 0.05%. The win rate favors bulls slightly, but the average up month is only 1.9% compared to a 2.2% decline for bearish months. This suggests that direction remains in the hands of how incoming data lands.

NFP has proven to be more useful as a volatility event than a directional signal, with average DXY returns close to flat on release day. The strongest directional skews sit either side of NFP, with T-1 being negative 56.4% of the time and T+2 being positive 56.4%. However, none of these probabilities are strong enough to treat as standalone signals.

The DXY rebound faces resistance near 100-101, and traders are trying to bid it towards this level. Unless the dollar goes into bullish overdrive soon, a swing high up to 101.0 is anticipated in anticipation of a breakdown from its rising wedge formation.