DXY Tests Critical 98.50 Zone, Can the Dollar Bounce Back?

The DXY clings to the lower bound of its long-term ascending channel near 99.00, a zone that historically offers strong support.

A monthly close below 98.50 could signal a deeper correction toward 92.00–94.00, potentially shifting the dollar’s yearly trajectory.

Sustained support and a bounce could spark a recovery to 104–106, pressuring assets like gold and crypto amid dollar strength.

The US Dollar Index (DXY) is currently challenging the lower limit of a long-term ascending channel at a pivotal point, according to analyst Captain Faibik on X. Historically, this range, between 98.50 and 99.00, has provided solid support. This level could support the bullish structure if it bounces decisively

A larger correction toward the 92.00–94.00 range might be triggered by a monthly closing below this zone. This region may determine the direction of the dollar for the remainder of the year. In the upcoming months, a recovery toward 104–106 might occur if the bulls maintain the line. A move like that might put risky assets like gold and cryptocurrency under further strain.

A Multi-Decade Dollar Journey

The DXY chart reveals a complex yet structured history. Starting around 120.00 in 2001, the index faced a steep decline. It dropped to approximately 72.00 by 2008. This marked one of the most dramatic dollar-weakening phases in recent history.

Source: Captain Faibik

The DXY steadied between 2008 and 2011, trading within a small consolidation range. In 2011, there was a bullish turnaround. As a result, by 2014, the index had recovered and was trading above 95.00. This pattern demonstrated steady strength and served as the basis for the present long-term channel. There was a sideways movement in the dollar between 2014 and 2017. The index moved in a narrow range between 92.00 and 103.00. Price action upheld the range-bound structure by honoring technical resistance and support.

Recent Movements and Technical Structure

From 2018 to 2022, a strong rally took shape. The DXY surged to nearly 114.00, a multi-decade high. This bullish momentum confirmed the validity of the upward trend channel. Moreover, the index's structure highlighted clear cyclical behavior tied to macroeconomic changes.

However, recent months have shown a pullback from those highs. The index currently trades near 103.00, signaling a retreat. Yet, it still remains within the rising channel. Technically, the DXY continues to maintain a bullish bias despite short-term weakness.

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