U.S. Dollar Index loses bullish footing as RSI signals weakness across timeframes
Geopolitical stress is now weighing on the dollars outlook.
The U.S. Dollar Index (DXY) has broken below a short-term bullish trendline, sliding to a three-day low of 101.55 on Wednesday during the European session. This comes just days after hitting a three-day peak at 103.2 and highlights how technical weakness and geopolitical stress are now weighing on the greenback’s outlook.
The latest slide began late Tuesday when the DXY failed to bounce from the trendline that had been supporting intraday lows since last week’s bottom at 100.8. By early Wednesday, the index pierced the supportive trendline, triggering additional selling pressure. Although a mild recovery to 101.95 has followed, the bounce has so far lacked strength, particularly as RSI conditions show no signs of bullish reversal.
U.S. dollar price dynamics (March - April 2025). Source: Tradingview
RSI readings across the hourly, daily, and weekly charts all point to bearish momentum. This consistent downside across timeframes reinforces the view that further weakness is likely, especially if price fails to hold above the immediate support level of 101.83. A breach of this level could extend losses towards a six-week low below 100.8
Trade war fears mount as China responds to U.S. 104% tariffs
Fundamentally, concerns surrounding the intensifying trade spat between the U.S. and China have aggravated downside pressure. Following a sharp increase in U.S. tariffs to 104% on Chinese imports, triggered by China’s 34% countermeasure, declaring intentions to fight “to the end” to protect its economic interests. Traders fear that prolonged trade tension between the world’s largest economies could stall growth and increase the likelihood of a U.S. recession.
As technical support breaks down and macro risks mount, sentiment around the U.S. dollar has shifted to defensive. Unless the DXY reclaim and hold above the near-term resistance at 102.8, which aligns with the 50-day EMA, the risk continues to tilt to the downside in the sessions ahead.
The dollar's rebound lost momentum at 103.2 after hitting resistance from the 50 EMA. Trade tensions and recession fears pressured sentiment, shifting focus to a possible June rate cut.
