DXY Hits Fresh Yearly Highs as Euro Selling Accelerates

Traders' Opinions

Summary:

DXY is extending its rally toward 102.85 as Euro weakness and relatively resilient Fed tightening expectations continue to support the US Dollar.

BUY USDX

EXP

TRADING

101.940

Entry Price

102.850

101.000

101.920 +0.300 +0.30%

0.0

Pips

Flat

101.000

Exit Price

101.940

Entry Price

102.850

The US Dollar remains firmly supported as investors continue to favour the Greenback against a backdrop of mounting French fiscal concerns and a widening divergence between expectations for the Federal Reserve and the European Central Bank.

The US Dollar Index (DXY) has pushed to fresh yearly highs, with the latest advance heavily influenced by persistent weakness in the Euro, which accounts for roughly 58% of the index. With bullish momentum intact, 102.85 is emerging as the next important upside objective.

Friday’s softer September employment figures did little to derail the Dollar rally. Instead, markets appear comfortable with expectations that the Fed will leave interest rates unchanged at its October meeting before delivering another hike in December.

Attention now shifts toward the ISM Services data, followed by Wednesday’s FOMC minutes. The minutes could prove particularly important by offering greater insight into why several Fed policymakers projected a second rate increase this year in their Dot Plot forecasts.

The broader advantage for the Dollar remains the relative resilience of US monetary policy expectations. Since late September, markets have removed around 30 basis points of anticipated ECB tightening, compared with only 13 basis points for the Fed. That growing policy gap, combined with pressure on the Euro from French fiscal risks, continues to favour further Dollar strength.

Technical Analysis

DXY is extending its recovery on the 4-hour chart, climbing toward 101.93 after buyers successfully forced price through a resistance barrier that had repeatedly contained previous advances.

The 101.45–101.55 region is now the key technical pivot. Rather than viewing the current move simply as another test of resistance, the latest price behaviour suggests the market is attempting to establish itself above this former ceiling. A pullback into the area followed by renewed buying would provide stronger confirmation that the breakout is genuine.

Immediate attention is now on the 102.00 handle. If bullish pressure remains intact above this threshold, the index has room to stretch toward 102.50–102.85. Continued momentum beyond that region could bring 103.50 into play, with the chart's broader projection eventually pointing toward approximately 104.50.

However, the speed of the recent advance leaves DXY vulnerable to some profit-taking before another push higher. Such a retracement would not necessarily undermine the bullish outlook. As long as the 101.45 area holds on a closing basis, dips can remain corrective within the broader advance.

A return beneath 101.45 would challenge that scenario and raise the possibility of a deeper retreat toward the next established demand region around 100.10–100.20.

The balance of the chart therefore continues to favour buyers. DXY has escaped a well-established resistance zone, momentum remains pointed upward, and former supply is positioned to provide support on any near-term retracement.

TRADE RECOMMENDATION

BUY DXY

ENTRY PRICE: 101.94

STOP LOSS: 101.00

TAKE PROFIT: 102.85

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DXY Hits Fresh Yearly Highs as Euro Selling Accelerates

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