Chart Overview
The U.S. Dollar continues its bullish trajectory due to optimism surrounding Donald Trump’s presidency and expectations for a pro-growth economic agenda. The DXY has successfully broken above its long-term descending trendline, with the price now consolidating just above 106.6, a key resistance-turned-support zone. This move puts the all-time high (ATH) at 114.789 firmly in focus for 2025. Let’s analyze!
Key Technical Patterns & Levels
Breakout Above Long-Term Trendline
The breakout above the descending trendline marks a major structural shift, signaling a reversal in the long-term downtrend. The breakout is supported by strong momentum, validating the bullish outlook.
Resistance Zone at 106.6-108.0
The current red resistance zone remains a key hurdle. However, recent weekly candles suggest buyers are defending this level, turning it into a support zone. A clean breakout above 108 could propel the DXY toward its ATH.
ATH Target at 114.789
The ultimate upside target lies at the 114.789 ATH, with intermediate resistance levels to watch around 110 and 112. The dollar’s strength continues to be underpinned by positive sentiment tied to Trump’s fiscal and monetary policies.
Bullish Case
- Pro-Growth Sentiment: Optimism about Trump’s pro-business policies, including tax cuts and deregulation, is driving demand for the dollar.
- Breakout Momentum: The breakout above the trendline solidifies the bullish narrative, setting the stage for higher highs.
- Institutional Inflows: Investors positioning for U.S. economic growth and rising interest rates are likely to provide continued support for the dollar.
Bearish Considerations
- Consolidation Risks: The current consolidation around 106.6-108 suggests a potential short-term pause before the next move higher.
- Overbought Signals: If the rally continues without pause, RSI and other momentum indicators could signal overbought conditions, leading to a pullback.
Outlook & Summary
- Short-term (1-2 weeks): Watch for a breakout above 108, which would confirm the next leg higher.
- Medium-term (1-3 months): The dollar remains on track for higher levels, with 110-112 as intermediate targets.
- Long-term (3+ months): A move toward the 114.789 ATH remains likely if Trump’s presidency continues to bolster market confidence.
Final Takeaway
The dollar’s breakout and bullish momentum reflect optimism about the U.S. economy under Trump’s leadership. As long as the DXY holds above 106.6, the path toward 114.789 remains intact, with potential pullbacks offering buying opportunities.
