Key Events
- The DXY is eyeing the 100 barrier, fueled by haven demand and EU political uncertainty.
- Rate-cut expectations are questioned to be fully priced into the dollar already.
- The U.S. government shutdown keeps U.S. data uncertain and haven demand afloat.
CME Fed Watch Tool – October 29 Expectations
Although the markets are pricing in another 25-bps rate cut in October with a probability of 94.6%, the U.S. Dollar Index is still tracing a bullish rebound, expected due to the following reasons:
- The rate-cut sentiment for Q4 2025 is already priced in, with the DXY having dropped all the way down to the 96-support.
- The U.S. government shutdown is increasing haven demand for precious metals and the U.S. dollar.
- Global uncertainties, especially within the EU, are weakening the EURUSD and supporting the relative bounce of the DXY.
Whether the dollar continues rising in line with its 17-year uptrend or drops again remains dependent on the confirmation of key technical boundaries.
DXY Outlook: Monthly Time Frame – Log Scale
Source: Tradingview
Analyzing DXY’s price action from a top-down approach — starting with the monthly time frame and narrowing down to the daily — price action remains supported by the 17-year trendline extending from the 2008 lows. The monthly RSI is also supported by a 17-year trendline connecting its respective higher lows, reinforcing a bullish continuation outlook for the dollar.
Should the index break below the 95-support, a shift in sentiment and scenario may take place. A key level I’m watching on the upside to confirm bullish continuation is the 103 mark, explained in the next chart.
DXY Outlook: Daily Time Frame – Log Scale
Source: Tradingview
From a daily time-frame perspective, a bullish reversal bias can also be seen given the positive divergence between the daily RSI and the chart’s lows from April through October, which may be tracing an inverted head-and-shoulders breakout.
A clean hold above the 100.20 mark is expected to extend gains toward 102 and 103.40, in line with the target of the H&S pattern. A sustained move above 103.40 may further confirm a longer-term bullish outlook for the dollar.
On the downside, a drop back below 97 and 95 could flip the narrative toward a bearish bias, potentially accelerating losses toward the 2021 lows near 92 and 89 respectively, boosting relative strength across currency pairs.
EURUSD Outlook: 3-Day Time Frame – Log Scale
Source: Tradingview
From a 3-day time-frame perspective, the April–October trendline connecting consecutive higher lows on the EURUSD chart has been breached, hinting at a bearish bias.
A clean hold below 1.1530 and 1.1490 may accelerate losses toward the 1.1390 mark before confirming another bullish rebound or deeper drop. On the upside, a clean hold back above 1.1660 may extend gains toward the 1.18 mark and revive the overall uptrend toward the 1.20 and 1.23 peaks.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
