US Dollar index at crossroads: Will it ascend to 105 or descend to 100?

economictimes.indiatimes.com:

It was least expected that the US Dollar index would give a breakdown on the chart below strong support of 100.50. And onto it, it was again least expected that the breakdown will be a false one. As the pair bottomed out near 99.50 and jumped sharply above 102.80 levels, the traders are into curious contemplation on the outlook.

First, let's check the reasons behind the recent jump and then analyze the outlook. Unravelling the surprising recovery from 99.50 to 102.80? Two primary factors contributed to this recovery: Robust US economic data and a Risk-off sentiment triggered by a credit rating downgrade.Robust US Economic Data: The given table identifies the positives for the US dollar. With 8 to 4, positives vs negatives, the sentiment turned positive for the US dollar.

It seems that there has been further momentum left in the economy despite a 5.25% rate hike in 1.5 years and as the Fed wanted, a Soft landing can be easily achieved.Risk-off sentiment triggered by downgrade:On August 1, credit rating agency Fitch downgraded the United States from its highest triple AAA rating to AA+. Two of the three leading ratings agencies now rate the US at their second highest tier – Standard and Poor’s previously downgraded the US to AA+ in 2011, leaving only Moody’s with the US at the highest rating. This downgrade raised concerns about potential fiscal deterioration over the next three years and the recurring debt ceiling negotiations in the United States.