Supported by three factors—a recovery in Treasury yields after a recent dip to a three-week low, firm expectations of a December Fed hike, and geopolitical tension in the Middle East that supports demand for safe assets—USDX pierced the psychological 102.00 mark and climbed to 102.22, as noted in our fundamental analysis and the report "USDX: FOMC to determine whether 102.00 break starts new rally."

The short-term picture improved after the 102.00 break: RSI (14) on the daily sits near 61, remaining positive but not yet overbought—another sign of a constructive bullish tone. However, confirmation of a real reversal needs further upside.

Key level for bulls — 102.30. The bullish scenario is conditional on a clean break and holding above that level.

Conditions for the bullish scenario

- Hold above 102.00. This is the first sign the breakout is genuine. If price holds, a move to 102.50 is possible.

- Break 102.30. A sustained close above opens the path to 102.50 and then 102.80–103.00.

- Hawkish Fed tone on October 28. If Warsh confirms intent to hike in December, the dollar will strengthen.

- Strong GDP or PCE prints (Oct 29). Confirmation of inflationary pressure will reinforce December hike odds.

- Technical confirmation: RSI (14) remains above 60, OsMA accelerates higher, and Stochastic stays in buy territory.

Alternative (bear) scenario: consider shorts if the price returns below 101.86 (H1 EMA200) with targets of 101.33 (H4 EMA200)–100.75 (W1 EMA200/EMA144) and a stop-loss above 102.30.

Conditions for the bearish scenario

- Return below 101.86 (H1 EMA200). This would indicate a failed breakout and renewed seller pressure.

- Sustained break of 101.33. This key support, matching H4 EMA200, would open the way to 101.08 (D1 EMA50) and 100.75.

- Dovish signals from the Fed. If markets sharply trim December hike odds, the dollar will come under pressure.

- Disappointing tech earnings. Weak results from Alphabet, Microsoft, or Amazon would deepen the AI sell-off, rotate flows into bonds, and weaken the dollar.

- Technical confirmation: RSI (14) falls below 45, OsMA accelerates downward, and stochastic forms a bearish cross.

The most possible scenario—range 101.86–102.50 with a bullish tilt into the FOMC. The 102.00 break improved the near-term case, but sustainable gains require 102.30 and a hawkish Fed signal. Until then, USDX should remain in this range. A break above the top opens 102.80–103.00; a break beneath the bottom takes the price to 101.30–101.00.

Logic

- USDX sits at the crossroads of several forces. On one side, a rebound in yields, hawkish Fed expectations (the December hike priced at ~80%), and geopolitical risk underpin the dollar.

- On the other, markets do not want to place aggressive bets before the FOMC. TD Securities warns rising downside risk to the dollar comes from a potential tech meltdown related to AI. If the tech sell-off intensifies, markets may revise Fed expectations lower, narrowing rate spreads and undermining the dollar's appeal.

- The key event is the FOMC on October 28. A confirmed hawkish stance would push USDX toward 102.50–103.00. If Warsh is more dovish than expected or tech earnings disappoint, USDX may fall back to 101.30 or lower.

Trading scenarios

- Bull scenario (break resistance): Buy stop 102.35. Stop-loss 101.80. Targets: 102.50, 102.80, 103.00.

- Bear scenario (break support): Sell stop 101.80. Stop-loss 102.35. Targets: 101.30, 101.10, 100.75, 100.45.

"Targets" correspond to S/R levels and are planning reference points—not guaranteed outcomes. Use proper risk management when sizing and placing trades.