The US Dollar Index (DXY), gauging the USD against six major currencies, trades around 99.20 amid European markets. It has been upward within an ascending channel, maintaining a positive short-term outlook. The index remains above both the nine-day and 50-day EMAs.
The RSI at 58.57 reinforces bullish momentum without breaching overbought levels. Immediate resistance sits at an eight-week high of 99.57, with a potential to reach 99.70. The seven-month high is 100.26 if the index breaks through these barriers.
Support Levels
On the downside, the index tests support at the nine-day EMA at 99.06 and psychological level of 99.00. A break below may lead to 98.80 at the 50-day EMA or 98.60 at the channel’s lower boundary. A further decline could target 97.75, the lowest since October 25.
The US Dollar saw percentage changes against major currencies, being weakest against the Swiss Franc. The changes were noted across currencies like the Euro, Yen, and others. Such movements are part of the broader market trends influenced by various global factors, including political and economic developments.
The US Dollar Index is currently exhibiting a bullish structure, now trading around 104.50. Looking back at analysis from late 2019, we can see a similar upward-trending pattern, though the key levels were much lower near the 99.00 handle. This historical context highlights a long-term strengthening trend for the dollar.
This present strength is supported by recent economic figures, as the December 2025 jobs report showed a robust addition of 210,000 non-farm payrolls. This strong labor market gives the Federal Reserve room to maintain its current interest rate policy without immediate pressure to cut. We are therefore watching for any softening in the Fed’s hawkish stance in the coming weeks.
Trading Strategy
For derivative traders, this creates an opportunity to consider strategies that benefit from defined risk, such as bull call spreads on the DXY or related ETFs. This allows for participation in a potential move towards the 105.00 psychological resistance while capping downside risk if the market reverses. The key is to position for continued strength but remain protected against a sudden shift in Fed sentiment.
The old technical analysis from 2019 pointed to 99.57 as major resistance, a level that was eventually broken. Today, we see a similar test building at the 105.00 mark, with immediate support resting near the 50-day EMA around 103.80. A sustained break above 105.00 could trigger a new wave of buying, targeting the highs we saw in late 2024.
It is important to recognize how market drivers have evolved from the trade-war rhetoric that dominated the 2019-2020 period. Back then, markets reacted to tariff threats, whereas today, the primary focus is squarely on inflation data and central bank policy. The upcoming Consumer Price Index (CPI) report for January 2026 will therefore be a more critical catalyst for market movement than any geopolitical headline.
