Capital flows into gold amid rising geopolitical and broader market risks, together with Jerome Powell’s remarks about potential criminal prosecution, have not only driven XAU/USD to record highs (as discussed earlier today) but have also put pressure on the US Dollar Index (DXY).

Markets are also digesting the latest Non-Farm Payrolls data released on Friday. The figures pointed to a slowdown in the US economy, with actual job growth at 50K versus expectations of 66K. This reinforces the case for interest-rate cuts and acts as a bearish factor for the US dollar.

As a result, the dollar index is moving lower today.

Technical Analysis of DXY

In the final days of 2025, when reviewing the DXY chart, we:
→ reaffirmed the descending channel (highlighted in red);
→ suggested that it would remain a key technical guide into early 2026.

This view has been confirmed, as the upper boundary of the channel is acting as strong resistance. Today’s decline appears to be a reversal from this level. In this context, it is reasonable to assume that:

→ the recent move represents an intermediate A–B–C corrective rise within a broader downtrend, with point C coinciding with RSI overbought conditions;
→ the short-term upward trajectory (marked by blue lines) may soon be broken by sellers. If the broader downtrend resumes, DXY could slide towards the median of the descending channel.

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