Dollar Index (DXY) Rises to Highest Level in Over Two Months

The chart shows the Dollar Index (DXY) trading above the 99-point level today — its highest since early August. The dollar’s strength is supported by the weakening of other currencies:

→ The yen is weakening amid expectations of looser monetary policy. Conservative Sanae Takaichi could become the first female prime minister in Japan’s history, pursuing substantial spending and economic stimulus.

→ The euro remains under pressure amid France’s political crisis. Following the resignation of Prime Minister Sébastien Lecornu’s government, President Emmanuel Macron stated he plans to appoint a new prime minister this week.

Will the Dollar Index continue to rise?

Technical Analysis of the DXY Chart

On 19 September, we provided a significant analysis of the DXY chart in which we:

→ Confirmed the relevance of a descending channel (shown in red), which includes intermediate QL and QH lines dividing the channel into quarters.
→ Highlighted a reversal upward from the QL line (shown with an arrow).
→ Suggested a bullish scenario aiming to reach the QH line.

This scenario has indeed unfolded:
→ On 25 September and 6 October (as shown by arrows), the QH line acted as resistance.
→ On 7 October, it was broken upward, underlining bulls’ strength.

Given this, it is reasonable to suggest that bulls remain in control, while:
→ DXY fluctuations since mid-September’s low are forming an upward channel;
→ its upper boundary may act as resistance, potentially triggering a pullback towards the Support line;
→ the upper boundary of the red channel appears to be a key target for the current rally that began last month.

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