On Monday (July 27), the US dollar index initially fell and fluctuated lower throughout the day, but gradually recovered its losses in the afternoon, currently returning to around 101.26. The intraday moving average resistance has turned into support, and the short-term bulls and bears are tending to be in equilibrium. The US dollar is currently just a step away from a 15-month high and is about to enter a crucial week, with market focus clearly on the Federal Reserve's interest rate meeting on July 29. Current market pricing indicates a roughly 65% probability that the Fed will maintain interest rates; however, the renewed escalation of tensions in the Middle East has led the market to re-escalate expectations of a possible rate hike later this year. The energy market remains the biggest variable: the collapse of the Iranian ceasefire agreement and the blockade of shipping routes in the Persian Gulf have pushed up oil prices, reigniting inflation concerns and potentially putting the Fed's policy stance in a dilemma. Market uncertainty has further intensified. ADP data showed that private sector job growth slowed for the fourth consecutive week, but initial jobless claims fell to a two-month low, indicating a clear divergence in labor market signals. Fed Chairman Kevin Warsh's congressional testimony did not provide a clear policy direction, only reiterating the commitment to price stability without revealing the Fed Committee's policy inclination. With the ECB's interest rate decision already in place and the preliminary services PMI data digested by the market, all eyes are on Wednesday's Fed decision, which will be the real catalyst for this week's market movements, potentially breaking—or continuing—the recent sideways trading pattern of the US dollar. Technical Analysis (US Dollar Index Daily Chart Source: FX678) The coming week is technically significant, with the US Dollar Index fluctuating fiercely between 100.00 and 102.00. The Federal Reserve's interest rate decision and the resulting market volatility may determine the short- to medium-term trend of the US Dollar. Bullish Scenario: In early 2026, the US Dollar Index opened under pressure, subsequently rebounding strongly from the support range of 96-97 in January, with a cumulative increase of approximately 6%. The index has recently stabilized above the key psychological level of 100.00, and the current price is supported by both the upward trend line and the 50-period exponential moving average. A decisive break above 102.00 would open up upside potential, targeting 103-104, and potentially challenging 106-107 in the medium to long term. Bearish Scenario: The US Dollar Index is currently encountering resistance at the 102.00 level. If the index encounters resistance and falls below the current upward trend line, while continuing the long-term downward trend that began from the 2025 high, it will return to the key support area of 100.00. A further significant drop could lead to a retest of the 96-97 support zone. With the Fed's decision imminent, the dollar is at a critical juncture. Whether the dollar index breaks upwards to a new high or returns to its previous downward trend, this week's outcome will affect more than just the dollar itself; it will also set the tone for the market performance of all dollar-denominated assets after autumn. At 17:57 Beijing time, the dollar index was at 101.1099/3399, down 0.19%.