The US Dollar Index (DXY) Falls to Its Lowest Level Since September

As the DXY chart shows, the US dollar index is trading today at its lowest level since September 2025. From this month’s peak, the decline has exceeded 2%.

Why Is the Dollar Weakening?

→ The Fed factor. The interest rate decision is due tomorrow. Markets are expecting dovish rhetoric from Jerome Powell to offset economic risks stemming from tariff wars. It cannot be ruled out that the Fed Chair may soften his stance under unprecedented pressure from the White House administration, including threats of criminal prosecution.

→ Loss of safe-haven status. The dollar is losing appeal as a defensive asset amid geopolitical tensions (the US–EU dispute over Greenland and strained relations with Canada). Capital is actively flowing out of fiat currencies into real assets, as confirmed by yesterday’s historic breakout in gold prices above $5,000.

That said, the technical picture offers some grounds for optimism among bulls.

Technical Analysis of the DXY Chart

On 20 January, when analysing the US Dollar Index (DXY), we:
→ updated the descending channel (marked in red);
→ suggested that the downtrend could continue, with a move towards the channel median.

However, bears exceeded our expectations and, after testing the upper boundary on 21 January (as shown by the arrow), pushed the price towards the lower boundary of the channel, which tends to act as support.

Moreover, the DXY index is now hovering near a long-term support zone from which the price rebounded twice in the second half of 2025.

This suggests that the aggressive downward momentum may be running out of steam, with the market likely to shift into a wait-and-see mode ahead of the Fed’s decision. Be prepared for spikes in volatility tomorrow between 22:00 and 22:30 GMT+3.

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