Introduction
The U.S. Dollar Index (DXY) has begun flattening after peaking back in January of this year. It appears to have found a floor at least for the moment between 96.5–98.5 after its steep decline earlier this year of 12.5%. While the downside pressure has eased, the index has yet to show signs of a bullish reversal, but let’s take a look at the technicals and see what they are telling us.
Technical Analysis
Trend Structure
- The primary trend remains bearish, with the DXY capped below both the 50-day MA (98.10) and the 200-day MA (102.27). Sometimes, however, bulls are able to push above the 50 moving average, but sellers quickly step back in.
- Price continues to drift sideways, holding above the 96.5–97.0 support zone, which has acted as a floor since July.
- Attempts to reclaim 100 have failed, and the index remains well under the 101.9 level, which marked the last major breakdown.
Support & Resistance
- Immediate support: 96.5–97.0 (recent lows). A breakdown here could accelerate losses toward 95.
- Resistance levels:
- 98.10 (50-day MA, near-term cap).
- 101.9–102.3 (major ceiling; reclaiming this would mark a shift in structure).
- Macro ceiling: 104.6, only reachable if Fed rate expectations shift hawkishly.
Key Levels
| Level | Type | Note |
|---|---|---|
| 104.6 | Resistance | Longer-term ceiling, 2025 Q1 pivot |
| 102.3 | Resistance | 200-day MA, macro trend signal |
| 101.9 | Resistance | Breakdown pivot from spring |
| 98.1 | Resistance | 50-day MA, near-term lid |
| 96.5–97.0 | Support | Holding since July, key floor |
| 95.0 | Support | Next major downside if floor fails |
Outlook
- Bull case: For the DXY to turn bullish, it would need to hold above 97 and reclaim 98.1, with momentum pushing past 101.9–102.3. That would likely require a fresh hawkish Fed narrative or rising U.S. yields relative to other currencies.
- Bear case: A decisive break below 96.5 opens the door to 95.0 and potentially lower, especially if global risk appetite stays firm and the euro maintains its strength.
Final Takeaway
The DXY is still in a range-bound pause within a broader bearish structure. The 96.5–97.0 zone remains important: as long as it holds, the dollar avoids fresh breakdowns, but the lack of momentum above the 50-day MA keeps the outlook heavy.
Until the Fed or global macro picture provides a catalyst, the DXY likely stays sideways-to-lower, which in turn supports euro, equities, and gold in the near term.
