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The U.S. dollar index is testing important historical support and is expected to stabilize above 96 points. A breakthrough of the 100.25 level will confirm a return to the 106 upward channel. On the other hand, a break above the 96-point level will cancel positive expectations and push the index down towards the 89-point level.
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There are differences in the performance of the U.S. dollar index in different time frames; it still maintains a bullish trend in the long term, a bearish trend in the medium term, and has recently entered a short-term sideways phase.
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There are differences in the performance of the U.S. dollar index in different time frames; it still maintains a bullish trend in the long term, a bearish trend in the medium term, and has recently entered a short-term sideways phase.
Technical points:
Support: The index is currently trading above the uptrend line and long-term ascending price channel, testing its lower boundary near 94.00 points.
Support Convergence: In addition to testing the ascending trendline and the lower boundary of the ascending price channel from 2011, the price is currently testing the key support level representing the lower boundary of the descending channel formed since October 2022, coinciding with short-term support near the 94.00 level.
Expected scenario (Q1 2026): The index is expected to stabilize above the main support area around 96 points. If it can successfully retest the 100.25 level and close above it by the end of the first quarter, this will open the door to regaining upward momentum during the remainder of 2026 towards the 104-106 levels.
Risk Management (Scenario Cancellation): Unless prices close below 96, the bullish scenario remains. A breakout of this support is considered a strong negative sign, counteracting the optimistic outlook and pushing the index towards 2020 levels near 89 points.
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DXY is testing key historical support; steady hold above 96.00 and a breakout above 100.25 would signal a bullish rally to 106.00. Conversely, a decisive close below 96.00 would invalidate the recovery thesis and shift bearish targets towards the 89.00 level
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Market Sentiment and Trend Overview: The U.S. Dollar Index (DXY) has shown mixed performance on different time frames. While the index maintains a long-term bullish trend, it is currently following a medium-term bearish trajectory and has recently entered a short-term sideways phase.
Technical points:
Support: The index is currently trading above the long-term uptrend line and major bullish channel, testing its lower limit near the 94.00 mark.
Convergence of Support: Price action is currently testing the key support level represented by the lower edge of the descending channel (formed since October 2022). This coincides with short-term support around 94.00, while also providing a significant test of the ascending trendline and the lower limit of the bullish channel that has been in place since 2011.
Projected scenario (Q1 2026): The index is expected to stabilize above the main support area around 96.00. A successful retest and decisive close above the 100.25 pivot point by the end of Q1 would pave the way for a resurgence of bullish momentum targeting the 104.00 – 106.00 range for the remainder of 2026.
Risk Management (Invalid Argument): The bullish outlook remains valid as long as the index remains above the 96.00 support level. Sustained closes below this threshold would serve as a major bearish signal, invalidating current recovery thesis and shifting downside targets towards the 2020 lows near the 89.00 level.
