In our previous analysis of the US Dollar Index (DXY), we:
→ outlined a descending channel (red) based on a sequence of lower highs and lows;
→ anticipated a move towards the median line of this channel.
As of 18 August, the DXY is trading around the median of the channel and is forming a contracting triangle pattern (blue). The RSI remains close to the neutral 50 level, indicating equilibrium between supply and demand.
This balance may be ruined given upcoming events:
→ Today, discussions at the White House between Donald Trump, Volodymyr Zelenskyy, and European leaders will focus on the conflict in Ukraine. The outcome may provide clarity following the Trump–Putin meeting on 15 August.
→ On Wednesday at 21:00 GMT+3, the FOMC minutes will be released. Markets will look for guidance on the likelihood of a September rate cut after last Thursday’s stronger-than-expected Producer Price Index (PPI) print, which some interpret as a signal of potential inflationary pressures from new trade tariffs.
Market participants should anticipate volatility, with price impulses possible in either direction.
The base scenario for the week is a test of one of the quarter lines (QL/QH) within the channel, consistent with the broader US dollar weakening trend in place since January 2025. A breakout of QL or QH line and sustained move away from the channel median would indicate a shift in sentiment and the potential for a directional move beyond the current structure.
