As expected, the Federal Reserve yesterday cut the Federal Funds Rate from 4.25% to 4.00%, while Jerome Powell’s remarks reduced the likelihood of further rate cuts. Meanwhile, decisions by other key central banks are also influencing the currency markets, according to Forex Factory:

→ The Bank of Canada lowered its policy rate from 2.50% to 2.25%, in line with market expectations. Its official statement highlighted risks of slower GDP growth, “continued weakness in the economy”, and concerns over U.S. trade relations and tariffs.

→ The Bank of Japan (BoJ) kept interest rates unchanged but signalled readiness to raise borrowing costs if economic conditions allow. This has shifted traders’ focus towards a possible rate hike as early as December.

→ The European Central Bank (ECB) is expected to leave its key rate steady, with the decision due at 16:15 GMT+3 today.

→ Next week, both the Reserve Bank of Australia and the Bank of England are scheduled to announce their policy decisions.

Against this backdrop, attention is increasingly turning to the Dollar Index (DXY) chart today.

Technical Analysis of the DXY Chart

On 19 September, we conducted a key analysis of the DXY chart, noting that:
→ The long-term downward channel (shown in red) remains relevant, divided into quarters by the intermediate QL and QH lines.
→ The index had rebounded from the QL line (marked by an arrow).
→ A bullish scenario was emerging.

Following that rebound, the price began to form an upward trajectory, reaching the upper boundary of the channel by 10 October — which, as anticipated, acted as strong resistance.

Currently, the DXY chart displays a narrowing triangle pattern, where:
→ The resistance is defined by the upper edge of the long-term descending channel that has contained the index’s 2025 movements.
→ The short-term upward channel from the September low remains intact.

This formation may reflect both the current balance of the U.S. dollar against a basket of major currencies and the uncertainty among analysts about its future direction.

Given the combination of central bank decisions, the U.S. government shutdown, geopolitical risks, and trade tensions, a breakout from this triangle could mark the start of a major trend lasting several weeks or even months.

Yesterday’s Fed decision strengthened the dollar, breaking through a local Bullish Flag pattern (shown in blue) and increasing the likelihood of further upward momentum.

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