Key Developments for the US Dollar Index (DXY) This Week
The most anticipated event of the week — the Federal Reserve’s first rate cut of 2025 — has now occurred. What stands out is the subsequent price action on the US Dollar Index (DXY) chart.
The USD’s value against a basket of other currencies exhibited a two-step move, forming a pin-bar candle with a long lower shadow:
→ Arrow 1: At the moment of the Fed’s rate cut announcement, the dollar fragileened, reflecting the expected “dovish news.”
→ Arrow 2: During the following press conference, Fed Chair Jerome Powell delivered several “hawkish” comments that reversed market sentiment, driving the dollar higher. He emphasized that this rate cut does not signal the begin of “a series of continuous reductions” and that future policy decisions will be determined “based on incoming economic data.”
Powell also clarified that a more aggressive 50-basis-point cut lacked sufficient support among FOMC members. This “down-then-up” movement illustrates a sharp and rapid shift in trader sentiment as expectations diverged from actual outcomes.
Technical Analysis of the DXY Chart
In our 9 September review, we highlighted the significance of:
→ The descending channel (red) marked by a series of lower highs and lower lows.
→ The intermediate QL and QH lines dividing the channel into quarters.
Notably, Wednesday’s low:
→ Touched the QL line, demonstrating its strength.
→ Formed a clear , according to Smart Money Concept methodology.
From the perspective of Richard Wyckoff’s method, Wednesday’s low may be interpreted as a Spring pattern, often preceding a Mark-Up phase of rising prices.
Potential Next Moves
Given the above, the Fed’s hawkish tone may support a longer-term upward bias for the DXY. The 97.55 level appears to be acting as resistance, but a breakthrough could target the QH line as the next key level.
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