DXY on double bottom breakout watch

We continue to track the developing double bottom on the U.S. Dollar Index (DXY) - see our Blog post from November 7. After successfully defending the rising 26- and 40-day moving averages (DMAs) during the pullback to 98.99 in mid-November and reclaiming the declining 200-day DMA near 99.75 on November 19, the stage is set for a potential breakout.

The key level is 100.26–100.36.

A decisive move above this zone is required to confirm the double-bottom pattern and unlock upside potential toward:

• 101.55 – 38.2% retracement of the January–September decline

• 103.19 – 50% retracement

• 104.10–104.84 – double-bottom pattern objective and 61.8% retracement

Until a breakout occurs, support is defined by the cluster of DMAs from 99.75 down to 99.23, followed by the mid-November low at 98.99. Holding this support zone keeps the bullish pattern intact (Chart 1).

A confirmed breakout would also validate a successful test of 14-year+ uptrend support, which could end the corrective phase from late 2022 and reinforce the longer-term bullish structure for DXY (Chart 2).

Chart 1: U.S. Dollar Index: Daily chart

Chart 2: U.S. Dollar Index: Weekly chart