The US Dollar Index (DXY) Turns Lower

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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