The US dollar has strengthened since mid-September, but its latest advance is encountering technical resistance that could determine whether the rally develops into a broader trend or gives way to a pullback. The US dollar index, which measures the greenback against a basket of six major currencies, recently moved above its 100-week moving average before momentum weakened in subsequent sessions.

Dollar Breaks Above a Key Long-Term Indicator

The dollar index’s move above the 100-week moving average represented an important technical milestone. Moving averages are widely used by market participants to identify underlying trends by smoothing short-term price fluctuations, while a move above a longer-term average is generally interpreted as evidence of improving momentum.

The move appeared to strengthen the case for a continuation of the dollar’s September recovery. From its mid-September trough to its recent peak, the index had advanced approximately 2.8%. However, the subsequent price action has introduced uncertainty over whether the move represents the beginning of a more durable rally or a shorter-term recovery within a broader range.

Bearish Patterns Signal a Loss of Momentum

The technical picture became less supportive after the dollar index moved above the 100-week average. Friday produced a bearish engulfing pattern, a candlestick formation in which the decline during the session encompasses the previous day’s open-to-close range. Technical analysts generally interpret the pattern as a potential indication that buying momentum is weakening.

That signal was followed on Monday by a bearish harami, another candlestick formation associated with reduced momentum and increasing market indecision. While neither pattern independently determines the direction of the market, their appearance shortly after the index crossed a major moving average gives upcoming trading sessions greater significance.

100.7 and 101.63–101.80 Become Key Levels

The dollar’s next moves could establish whether the recent weakness is temporary or marks a broader reversal. A decline below the 100-week moving average near 100.7 would weaken the technical structure of the September advance and bring the 100 level into focus. A sustained move below that area could raise the possibility of a decline toward the September 9 low of 98.5980.

Conversely, a recovery above the recent resistance zone between 101.63 and 101.80 would strengthen the case for further gains. Those levels correspond with June and July highs, which technical analysts often monitor because previous peaks can act as resistance during subsequent advances. A break above the range could shift attention toward 102.87, followed potentially by 104.59.

For investors in Israel and global markets, the dollar’s technical direction remains relevant because movements in the greenback can influence currency valuations, commodity prices, international capital flows and the returns of assets denominated in different currencies. The coming sessions will therefore be important for determining whether the September rally can overcome the emerging signs of fatigue. A sustained break above 101.63–101.80 or a fall below 100.7 could provide a clearer indication of the dollar’s next technical phase, while continued trading between those levels would suggest that market participants remain undecided.