The second half of February has seen the dollar index strengthen, driven by a combination of bullish factors:

→ A hawkish Fed stance. Minutes from the latest FOMC meeting revealed differing views on rate cuts. With inflation remaining resilient, some members even left the door open to further tightening.

→ Rising tensions between the US and Iran, along with uncertainty surrounding trade tariffs, have boosted demand for the dollar as a safe-haven asset.

→ Recent data pointing to solid industrial output and labour market resilience have reinforced confidence in the strength of the US economy.

As a result, an upward trend line (shown in blue) has formed on the DXY chart, increasing the likelihood that the index will finish February in positive territory after three consecutive months of decline.

Technical Analysis of the DXY Chart

On 16 February, when analysing the dollar index (DXY), we:

→ Updated the descending channel (marked in red), originating in November 2025.
→ Highlighted strong demand, reflected in the confident upward trajectory (shown by the arrow) following the brief break below the multi-month low of 96.50 in late January.

Lower highs at points A and B suggest that the upper boundary of the channel continues to act as resistance, while the hesitant price action after breaking the 5 February high indicates waning bullish momentum. This raises the possibility that the blue uptrend line could soon come under pressure from renewed bearish attempts.

On the other hand, there are clear signs of active demand near the key 96.50 level. Therefore, in the longer term, bulls may regain strength and attempt to overturn the broader downtrend.

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