Jemy Finance Market Research Team At Jemy Trade
2025-08-30
In a previous article published on the Jemy platform, titled “Jemy Trade Experts’ Bearish DXY Forecast Confirmed as Dollar Collapses,” we discussed how the technical analysis of the U.S. Dollar Index (DXY) was pointing to a potential weakness in its upward trajectory. Today, with the latest developments in global markets and new economic data, we dive deeper into this analysis to see if the downtrend will continue, or if new factors might change its course.
Technical Analysis: The Break of the Ascending Channel Opens the Door for Further Weakness
The charts provided by our research team since the beginning of the year showed that the Dollar Index was moving within a long-term ascending price channel. While this pattern might suggest a positive trend, we warned of the possibility of losing momentum, which is precisely what happened. Technical data has shown that the DXY has broken below the bottom of its ascending support channel, which is considered a strong technical signal of a potential trend reversal from bullish to bearish.
- The Bearish Scenario (Red Path): This scenario suggests that the Dollar Index may continue its decline towards much lower support levels, possibly heading toward the 85-88 point area in the medium to long term. This path aligns with the technical view that the dollar’s purchasing power has faded and that a downward corrective movement has begun.
- The Bullish Scenario (Blue Path): Conversely, there remains a possibility of a strong rebound if the index can climb back above key resistance levels, but this scenario appears less likely at the moment.
Fundamental News: Fed Policy and Economic Data as Key Drivers
The analysis of the Dollar Index cannot be complete without considering the fundamental factors that either support or weaken it. The latest news and economic data have revealed several factors currently impacting the dollar’s trajectory:
- Federal Reserve Decisions: After years of tight monetary policies to curb inflation, markets are beginning to anticipate a more “accommodative” stance from the Federal Reserve. Any talks of future interest rate cuts or a pause in monetary tightening increase the pressure on the dollar, making it less attractive to investors seeking high returns.
- Declining Inflation: The latest inflation reports in the United States indicate that inflation has started to decline and is approaching the Fed’s target range. This reduces the need to keep interest rates high, which in turn weakens the dollar’s value.
- Global Economic Growth: While the dollar has been considered a safe haven during periods of global economic uncertainty, improving economic forecasts in other regions like Europe and Asia may encourage investors to shift their capital to other currencies, increasing selling pressure on the dollar.
Conclusion: A Continued Expectation of Short-Term Weakness
Based on the interplay between technical and fundamental analysis, the most probable path for the Dollar Index appears to be a continuation of its weakness. The break of the ascending support channel confirms that the upward momentum has ended, while fundamental factors related to Fed policies and global growth expectations support this bearish trend.
However, it is always crucial to closely monitor developments, as any change in monetary policy or the release of unexpectedly strong economic data could lead to a swift change in this trajectory.
