U.S. Dollar Index set to end 4 weeks of losses amid trade optimism
Thursday's price action highlighted the dollar's resilience
The U.S. Dollar Index (DXY) is on track to end its consecutive bearish weekly moves after four weeks of downward pressure.
The recent recovery in the dollar index has been supported by key technical levels, with the 20 and 50-hour moving averages acting as strong areas of support. This shift in sentiment is crucial as the dollar moves back into bullish territory, aided by both technical indicators and macroeconomic factors.
Thursday's price action highlighted the dollar's resilience within its broader uptrend. Despite an intraday bearish correction, the DXY found solid support at the 98.85 level, coinciding with the 1-hour moving averages (MAs). This technical floor provided the stage for a quick recovery, as the dollar reversed losses, for a stronger Friday performance.
RSI enters bullish territory and signals the potential for further dollar strength
On Friday, April 25, the dollar surged, pushing higher and erasing the previous day's losses. A key catalyst for this move was a report suggesting that China was considering tariff exemptions for certain U.S. goods, sparking optimism about a potential de-escalation in the ongoing trade tensions between the U.S. and China. This development stoked fresh buying interest in the dollar, which surged to around 99.5 in the European session, marking a 0.6% gain on the day.
DXY price dynamics (April 2025). Source: TradingView
From a technical perspective, the dollar’s recent surge is supported by the 4-hour Relative Strength Index (RSI), which is currently in bullish territory near the 60 level. This suggests that the dollar has momentum to test key resistance levels, including the previous week's high of 99.88 and potentially the psychological 100 mark before the end of the trading week.
Looking ahead, the dollar’s trajectory will likely be influenced by continued developments in the trade negotiations between the U.S. and China. Should the dollar break above 99.88, it could open the door to further gains, testing the 100 level and shifting market expectations for the weeks to come. However, if the dollar fails to hold above 98.85, it may face renewed pressure, putting the recent bullish trend at risk.
The U.S. Dollar Index recovery stalls despite Trump's policy softening and trade rhetoric. DXY gained 2%, driven by a technical rebound and a shift in U.S. policy tone.
