Dollar Index Momentum Signals
The 14-day Relative Strength Index (RSI) is around 58 and remains below overbought levels. This points to ongoing upward pressure without extreme conditions. On the upside, the DXY may retest the 10-month high of 100.64 set on 31 March. A further rise could move towards the upper channel boundary near 102.40. On the downside, support is seen at the nine-day EMA near 99.95 and then the lower channel boundary around 99.70. A break below the channel could bring the 50-day EMA at 99.02 into view. A separate performance table compares the US dollar’s percentage moves versus major currencies today. It shows the US dollar was weakest against the New Zealand dollar, using a heat map of pairwise changes.Longer Term Dollar Outlook
Looking back at the analysis from this time in 2025, we saw the US Dollar Index consolidating around 100.10 with a mild bullish bias. That uptrend signal proved correct, as the index is now trading significantly higher near 105.50 as of April 6, 2026. This long-term strength validates the ascending channel pattern we were tracking last year. The dollar’s ongoing momentum is now fueled by fundamental economic data, not just technical patterns. The latest US Consumer Price Index report for March 2026 showed inflation was stickier than expected at 3.1%, pressuring the Federal Reserve to maintain its hawkish outlook. This economic reality continues to make the dollar more attractive than other major currencies. For the coming weeks, this environment suggests that buying call options on the US Dollar Index is a viable strategy. Recent data from the Commodity Futures Trading Commission (CFTC) shows that speculative net long positions on the dollar have increased for the third straight week. This indicates that other large traders are also positioning for further dollar strength. Traders could consider call options with strike prices around 106.00 or 106.50 expiring in May or June 2026. This approach allows for participation in the expected upward move while defining maximum risk to the premium paid. It capitalizes on the view that the index will challenge its recent highs in the near future. The key support levels we monitored in 2025 are no longer relevant given the significant price appreciation. Instead, we should now watch the 50-day moving average, currently around 104.20, as the new critical support zone. A break below this level would signal a potential loss of momentum and would be a trigger to reassess bullish positions. Create your live VT Markets account and start trading now.
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