U.S. Dollar Index may extend rally if court tariff block holds and RSI climbs above neutral
Dollar index breaks 99.55 as economic data fuels bullish reversal
The U.S. Dollar Index (DXY) extends its upside bias this week, backed by a mix of strong economic data and monetary policy expectations.
Thursday’s European session shows the index stabilizing near 99.61, after opening the day with a sharp 0.5% gap up to 99.95 from Wednesday’s close at 99.43.
Highlights
-DXY breaks above 99.55 and clears key moving averages early Thursday
-Court ruling on tariffs boosts global sentiment and dollar demand
-Further gains possible if RSI shifts above neutral and momentum holds
Wednesday's advance was first driven by upbeat U.S. consumer confidence and durable goods data. Both indicators strengthened the case for economic resilience, helping the dollar continue its weekly upward push. Furthermore, the FOMC meeting minutes added weight to the bullish case. Policymakers noted concerns over sticky inflation and softening labor conditions, which kept rate cut expectations in check and supported the greenback.
The bullish sentiment intensified overnight following a U.S. federal court ruling that blocked President Trump’s broad-based global tariffs. The Court of International Trade concluded that the emergency law used to justify the tariffs was misapplied. This decision opened the door for a stronger risk appetite across global markets and reinforced the dollar’s appeal, prompting Thursday’s gap up open.
The U.S. Dollar Index short-term structure turns bullish after 20, 50, 100 EMA breakthrough
Technically, the opening surge today is significant. It broke above the prior resistance at 99.55 and cleared the 20-day EMA, these technical levels have capped price gains in previous weeks. The rally also pierced through key short-term averages on the 4-hour chart, the 20, 50, and 100 EMAs thus flipping the market structure to the upside and confirming short-term momentum strength.
The U.S. Dollar Index price dynamics (April - May 2025). Source: TradingView
After today’s strong start, DXY has retraced slightly to 99.61 as price usually fills the inefficiency left by a gap. The 99.55 level, now acting as support, has cushioned the decline and is reinforced by the presence of the 20-day EMA.
Despite the technical breakout and positive economic catalysts, the daily RSI only rose to neutral levels. If momentum continues and RSI crosses into bullish territory, it may support further gains in the coming sessions.
As of today, the DXY is down 0.35% intraday but holds a weekly gain of 0.94%. If the tariff reversal is upheld in the coming days, the greenback could benefit from a broader global sentiment shift and potentially extend its upward move past the 100.0 psychological level.
The U.S. Dollar Index at risk of fifth straight monthly loss if key data fails to support price. Market focus shifts to consumer confidence and durable goods data for near-term cues.
