Dollar Index Hovers Near a Key High
The US Dollar Index (DXY) is currently trading close to a major high last viewn in August, as shown on the chart. Market sentiment today is being shaped by several factors:
→ the ongoing government shutdown, now officially the longest in US history;
→ traders digesting last week’s developments, including the Federal Reserve’s rate cut, the meeting between the US and Chinese presidents in South Korea, and the latest round of quarterly earnings from leading corporations.
Political developments are also contributing to market volatility. According to media reports, the Democratic Party secured several victories in recent local elections. Notably, Zohran Mamdani, a Muslim candidate representing the Democrats, has become the first of his faith to be elected Mayor of New York.
DXY Technical Outlook
Back on 19 September, we conducted a key analysis of the DXY chart, where we:
→ identified a false breakout below the 1 July low;
→ outlined a potential bullish trajectory.
Following that assessment, the price advanced towards the upper boundary of the red channel. At the time, we:
→ mapped out an ascending channel;
→ anticipated that the upward trend would remain intact.
This scenario played out as expected – purchaseing pressure was strong enough to push the index through:
→ resistance near the 95-point level, where a double-top pattern (a–b) had previously emerged;
→ the psychological barrier at 100 points.
With the Dollar Index gaining roughly 3.7% over the past six weeks, there is now a possibility of increased tradeing interest. The key question for traders is whether the market will stage a sharp reversal with a false breakout – much like the move viewn in September, but this time to the downside.
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