The U.S. dollar is creeping up toward a key trend resistance!
Sellers have been in control so far, but a break above this level could shift the momentum.
We’re watching the 4-hour chart closely to see if the dollar keeps grinding lower or finally breaks out.
U.S. Dollar Index (DXY) 4-hour Forex Chart by TV
The U.S. dollar picked up some momentum to start the week, thanks to a strange mix of optimism and risk-off vibes.
Traders were feeling upbeat on talk that the U.S. might announce more trade deals before the July 9 deadline. There were also rumors that the deadline could be extended to August 1. At the same time, risk aversion kicked in after Trump rolled out fresh tariff rates on a few trading partners.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The U.S. Dollar Index (DXY) had been climbing off its 96.50 lows and managed to hit the 97.50 area before red candlesticks started showing up on the 4-hour chart.
Was yesterday’s upswing a fluke?
We’re keeping a close eye on the 97.50 to 98.00 zone. That area’s packed with technical hurdles, like the R1 Pivot Point at 97.48, the 38.2% Fib of the late June drop, and the 100 SMA on the 4-hour chart.
More importantly, it’s bumping right up against the trend line resistance that’s been holding since mid-June.
If the red candles keep coming and bearish momentum picks up, DXY could slip back to its 96.50 lows or even print fresh 2025 lows.
But if the bulls show up and the index starts pushing above the 98.00 handle, then we could be looking at a break in the longer-term downtrend, with the next stops possibly around 99.00 or even 100.00.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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