Dxy Technical Levels
On the charts, DXY faces resistance at 100.00, then 100.39 (November 21) and 101.97 (May 12). If it drops below the 200-day SMA at 98.34, levels to watch include the 55-day SMA at 98.05, 96.49 (February 11), and 95.55 (January 27). Inflation is commonly tracked as MoM and YoY changes, while core inflation strips out food and fuel and is often targeted near 2%. CPI tracks price changes in a basket of goods, and higher inflation can lead to higher rates, supporting a currency and raising the cost of holding gold. With the US Dollar Index pushing towards the 100.00 mark, we are positioning for continued strength in the coming weeks. The ongoing flight to safety, driven by international tensions, provides a strong tailwind for the dollar. We see this trend continuing as long as these geopolitical risks remain elevated. This bullish outlook is reinforced by fresh economic data showing Core PCE inflation remains stubborn at 2.9%, well above the Federal Reserve’s target. Consequently, the 10-year Treasury yield has climbed to 4.55%, making the dollar more attractive to hold. The market is now pricing in a much lower probability of a Fed rate cut before the third quarter, further supporting our view.Options And Futures Strategy
For options traders, the elevated uncertainty, reflected by the Cboe Volatility Index (VIX) holding near 18, makes buying call options on the dollar expensive. We should consider strategies like selling out-of-the-money puts on the DXY or using bull call spreads. This allows us to profit from the upward move while managing the high cost of premiums. Those trading futures should use the psychological 100.00 level as an initial target. A decisive break above this could see a quick move towards the November 2025 high of 100.39. We are placing protective stops below the critical 200-day moving average at 98.34 to manage downside risk. Looking at positioning data, we see that large speculators have increased their net long positions in the US dollar for the fourth consecutive week, according to the latest CFTC report. This confirms that the broader market sentiment aligns with our bullish stance. This momentum suggests that dips are likely to be bought quickly. This dollar strength also informs our strategy in other currency pairs. We see opportunities in shorting pairs like the EUR/USD, especially as recent European economic indicators have shown signs of softness. This provides another way to express our long-dollar view. Create your live VT Markets account and start trading now.
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