Victoria Bazir
The U.S. Dollar Index (DXY) has defended its 14-year ascending trendline once again, proving that the long-term structure behind the greenback remains solid. After drifting lower for months, the index bounced from a key zone near 95–96, signaling that global investors still view the dollar as a reliable anchor during times of monetary uncertainty and geopolitical tension.
Chart Analysis: Three Touches, One Trendline
Looking at the long-term technical picture, the evidence is striking. The monthly DXY chart from Barchart trader shows three critical reactions to the same structural support level, each marking a pivotal moment in the dollar's journey.
These aren't random bounces—they represent deliberate turning points where market participants stepped in with conviction:
- 2011: The dollar started recovering from post-crisis lows as the Fed wrapped up quantitative easing and markets found their footing
- 2020–2021: Pandemic-driven inflation and aggressive Fed rate hikes pushed the DXY sharply higher, strengthening the uptrend
- 2025: The index tested the rising trendline again, forming a third higher low before rallying back toward 99.8 by October
This recurring pattern reveals a durable bullish foundation that's weathered major global disruptions—from the Eurozone debt crisis and COVID-19 to the recent tightening cycle. Historically, each test of this trendline has led to a fresh leg higher for the dollar. The steady upward slope reflects over a decade of structural appreciation, driven by the U.S. economy's relative strength and its role as the world's liquidity center. The three marked lows confirm this as one of the most respected support zones in macro-FX markets.
Macro Context: Policy, Inflation, and Safe-Haven Flows
The 2025 rebound aligns with mixed messaging from the Federal Reserve. Inflation has cooled from 2022 peaks, but rates remain elevated, and markets are pricing in fewer cuts than expected. This backdrop supports the dollar, as higher U.S. yields keep foreign demand for Treasuries and American assets strong. Economic weakness in Europe and Asia, combined with renewed geopolitical risks, has boosted demand for dollar liquidity. Investors see the greenback not just as a store of value but as protection against volatility in emerging markets and commodities. The stabilization of money supply growth and slower fiscal expansion have also helped maintain the dollar's purchasing power. Despite short-term pullbacks, the macro environment continues to favor U.S. currency strength over the medium term.
Waiting for the Next Signal
The DXY is now trading near 100, with resistance around 105–106 and firm support just below 95. As long as the index holds above its multi-year trendline, the broader picture stays positive, meaning cyclical corrections are more likely pauses than full reversals. What happens next will depend on Fed guidance, global risk appetite, and oil price movements. Analysts are watching closely to see whether the dollar resumes its long climb or settles into a period of sideways trading. Either way, the chart's structure continues to point toward long-term stability.
Victoria Bazir
