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DXY at a Crossroads: A Dual-Timeframe Technical Analysis of the U.S. Dollar Index
As of April 22, 2025, the U.S. Dollar Index (DXY) has slipped to the 98.00 level, revisiting a critical area last tested in early 2022. This development is drawing renewed market attention, not just due to the psychological importance of this level, but also because it coincides with an environment of increasing macroeconomic uncertainty. In this analysis, we take a neutral stance and examine the DXY from two perspectives — the weekly and daily timeframes — to better understand what could lie ahead.
The Role of the U.S. Dollar Index in Global Markets
The DXY tracks the performance of the U.S. dollar against a basket of six major global currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. A rising DXY generally signals strength in the U.S. dollar, while a falling DXY indicates weakness.
Movements in the DXY can significantly impact a variety of asset classes and economic variables, including commodity prices, emerging market currencies, international trade dynamics, and inflation trends. That’s why traders, investors, and policymakers closely monitor this index.
Weekly Timeframe: Retesting Major Long-Term Support
From a weekly perspective, the DXY has been in a consistent downtrend since peaking around 114 in 2022. The price has been printing lower highs and lower lows, forming a classic bearish structure.
At present, the index is hovering right around the 98.00 level, a historically significant support zone. This level acted as a major pivot in past cycles—serving as resistance in 2020 and support in late 2021 and mid-2023. A decisive move below this level could open the door to a more aggressive leg down.
Looking at the technical indicators, the MACD remains in bearish territory. The MACD line is still below the signal line, and the histogram is negative, although the bars are beginning to shorten. This suggests that while downward momentum is still present, it may be starting to fade.
Meanwhile, the Stochastic RSI is deep in oversold territory. The indicator is beginning to curl upwards slightly, a potential early sign of reversal. However, it is not yet signaling a confirmed bounce.
The key weekly levels to monitor are the support zone between 97.50 and 98.00, and the first layer of resistance around 100.50. A sustained move above that resistance could signal the start of a broader retracement.
Daily Timeframe: Bearish Momentum Still Active but Slowing
Zooming into the daily chart, we see a continuation of the downtrend that began in mid-March. The index has consistently made lower highs and lower lows, with no signs of strong bullish intervention.
The MACD on the daily chart remains bearish. The MACD line is well below the signal line, and although the histogram bars are negative, they are beginning to shrink in size. This indicates that the momentum is weakening, which often precedes a consolidation or a bounce.
The Stochastic RSI is also in deep oversold territory, with values well below 20. While the lines are still flat and have not crossed, the indicator is already signaling exhaustion. Traders often watch for a crossover here as a potential early sign of price recovery.
From a price level standpoint, the nearest support is at 97.80 to 98.00. If the index breaks and closes below this level, it could trigger a continuation toward 96.50 or even 95.00. On the upside, resistance levels are clustered around 99.20 to 99.50 — levels where price previously paused before resuming its descent.
Cross-Timeframe Analysis: What the Market is Telling Us
Both the weekly and daily charts confirm that the DXY is in a bearish phase. However, there are early technical signs that the momentum is softening, especially on the daily timeframe. On both timeframes, the MACD is bearish but shows signs of deceleration, while the Stochastic RSI is oversold — a classic setup that often precedes at least a short-term bounce.
The weekly chart highlights how significant the 98.00 level is from a long-term perspective, making this a potential pivot zone. The daily chart adds more nuance, showing that while momentum is still negative, it's slowing down. Together, these observations suggest the index may be approaching an inflection point.
Neutral Scenarios: Mapping Out the Possibilities
From a neutral analytical standpoint, there are three main scenarios to consider over the coming days and weeks:
In the base case, the DXY finds support around 98.00 and consolidates sideways. This would reflect a market waiting for new macroeconomic data before committing to a direction. A range-bound structure between 97.80 and 99.50 could emerge in this scenario.
In the bullish case, technical exhaustion leads to a short-covering rally. The combination of oversold momentum indicators and the key support zone at 98.00 could prompt buyers to step in, pushing the index toward 99.50 or even 100.50. This scenario would likely require softer U.S. economic data or a dovish shift in Federal Reserve language.
In the bearish case, the DXY fails to hold the 98.00 level and breaks down with increased momentum. A move toward 96.50 becomes more probable, especially if global risk sentiment improves or U.S. data deteriorates significantly. Strong economic reports from other major economies, such as the Eurozone or China, could further pressure the dollar in this case.
Macroeconomic Backdrop: The Bigger Picture
This technical setup is unfolding amid heightened focus on U.S. macro data and Federal Reserve policy signals. The economic calendar for April 22–25 includes several key releases: new and pending home sales, the Q1 advance GDP print, and the March PCE inflation report.
These data points will offer clues about the trajectory of the U.S. economy and inflation — both of which directly influence expectations around interest rate policy. A softer tone in this week’s data could reinforce the idea that the Fed is nearing the end of its tightening cycle, which would further pressure the DXY.
Additionally, U.S. Treasury yields have shown signs of easing recently, with the 10-year yield hovering near 4.2%. A sustained decline in yields could weigh further on the dollar and add fuel to any technical breakdown.
Conclusion: Eyes on 98.00
The U.S. Dollar Index is teetering on the edge of a major technical level, and both the weekly and daily charts confirm that this is a high-stakes zone. While momentum remains negative, indicators are showing early signs of exhaustion. Whether this translates into a technical bounce or a decisive breakdown depends on how the market responds to the macroeconomic landscape this week.
For traders and analysts, the prudent approach now is to remain patient, respect support and resistance levels, and watch for confirmation signals. The 98.00 level is the line in the sand — and how DXY behaves here may dictate not just its own path, but also the near-term direction for risk assets around the world.
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