The US Dollar Index (DXY) is trading near 98.10 in early European hours on Tuesday, after small losses the previous day. It is still moving within a descending channel on the daily chart, which points to a bearish bias.
DXY remains below the nine-day and 50-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) is near 40, which suggests weak momentum.
The index could drop towards the lower end of the channel near 97.20. If it breaks below the channel, it may move towards 95.56, the lowest level since February 2022, reached on January 27.
Resistance is at the nine-day EMA at 98.41, then near 98.70 at the top of the channel, and the 50-day EMA at 98.83. A move above these levels could shift bias higher and open the way to 100.64, a nearly 10-month high set on March 31.
The technical analysis was produced with help from an AI tool.
The technical view from last year, when we were watching the US Dollar Index trade around 98.10, pointed to a clear bearish bias within a descending channel. This outlook was based on the index trading below key moving averages and a weak RSI reading, suggesting sellers were in control. The expectation then was for a potential slide toward the 97.20 level or even lower.
Fast forward to today, April 21, 2026, and the picture has changed significantly, with the DXY now trading near 104.50. The bearish channel from 2025 was broken to the upside late last year, and the dollar has since shown persistent strength. This reversal has been fueled by recent economic data showing inflation remains stubborn, with the March 2026 Consumer Price Index (CPI) report coming in at 3.1%, beating expectations.
This persistent inflation has forced a repricing of Federal Reserve policy expectations, with markets now anticipating fewer interest rate cuts in 2026 than previously thought. We see this reflected in Fed fund futures, which have shifted from pricing three cuts to now pricing in just one or two for the entire year. This contrasts with the European Central Bank, which is now signaling a higher probability of rate cuts beginning this summer.
Given this new bullish momentum, we should consider strategies that profit from a stronger dollar in the coming weeks. Buying call options on dollar-tracking ETFs like UUP provides a defined-risk way to capture further upside. Traders with a higher risk appetite might look at going long on DXY futures contracts.
For risk management, we should watch the 103.80 level, which corresponds with the 50-day moving average, as a key support zone. A break below this level could signal that the current bullish trend is losing steam. Our upside target in the near term is the 105.75 resistance area, a level we haven’t seen since the fourth quarter of 2025.
