Dollar Index – Weekly Analysis

After a 2% loss last week, the Dollar Index has paused. The key question now is whether DXY is beginning a bottoming process—or simply consolidating before another leg lower.

The answer matters far beyond currencies. A renewed dollar advance could restore pressure on precious metals, commodities, and other dollar-sensitive assets, while continued weakness could provide relief across several markets.

In this DXY Technical Analysis, we examine the latest candlestick signals, classical chart patterns, momentum shifts, and multi-timeframe structures to assess what the Dollar Index is signaling now.

The recent decline was meaningful, but DXY still needs to prove whether it is preparing for a genuine reversal—or merely resetting before the next major move.

CANDLES

This week, the Dollar Index closed with bearish candles on both the weekly and daily frames. However, I cannot say that the technicals overwhelmingly support further downside. Multiple divergences on the hourly frames are raising the probability of an upward move, at least in the form of a short-term bounce.

The July monthly candle formed a Dark Cloud Cover, although the underlying technical structure remains largely bullish. The candle itself still requires confirmation, which brings the broader odds closer to neutral. We will likely need to wait until the end of August for a clearer resolution.

Overall, DXY remains bearish in the short and mid term, while the long-term outlook is neutral pending confirmation. The risk of a bounce remains elevated.

In the April monthly report, we also discussed a developing 50/100 MA bullish cross on the 4M frame. The cross has not been recorded yet, but the two averages remain within one basis point of each other. The August close will therefore be critical for both the prospective cross and the possibility of a bullish 4M candle.

ELLIOTT WAVES

At this stage, there is no substantial evidence to justify a change in the very long-term outlook.

The June close likely provided confirmation for the long-term bullish path.

Last Wave

The latest wave down has extended, but it still remains corrective. At this point, I am viewing it as a potential wave ii of (iii), although the odds are not particularly strong.

A move below the bottom of wave (ii) would invalidate this setup.

SUMMARY

The Dollar Index remains bearish in the short and mid term, but the broader picture is becoming more balanced. Weekly and daily candles continue to lean bearish, yet the technical support for further downside is not overwhelming, while several hourly divergences are raising the odds of at least a short-term bounce.

The July monthly Dark Cloud Cover still requires confirmation, and the larger-frame structure remains unresolved. The developing 50/100 MA bullish cross on the 4M frame is still in play, making the August close particularly important.

From an Elliott Wave perspective, the latest decline still appears corrective and may be developing as wave ii of (iii), although this count is not yet strong. Overall, DXY remains bearish for now, but the risk of a bullish reversal or countertrend bounce is elevated.