DXY Driving US Dollar Pairs
Yesterday we wrote about how the DXY had a nasty move on December 25th/26th during quiet trading, which was exacerbated by the holiday with many markets closed. Price spiked lower by over 100 pips and bounced back to unchanged within 2 hours! Looks like there may be some real money behind that move as the US Dollar Index continues to move lower today. The move on the 25th had the looks of a Central Bank all over it (ie..no idea how to trade, just get it done). Whoever is selling US Dollars today seems to have learned from that move. Instead of dumping the US Dollar position all at once in a thin market, someone may have realized its smarter to piece meal the trade. (This is total speculation on my part).
Price so far today has retraced 61.8% of the spike lower to 96.97. If the US Dollar breaks below, price can easily run down to the spike low at 96.59. And as we have discussed before, if someone needs to get something done heading into year end, price and technical won’t matter.
Source: Tradingview, FOREX.com
On a daily timeframe, the US Dollar broke lower on December 13th out of the upward sloping channel where price has been since mid-2018. Price then bounced and retested the bottom trendline of the channel and the 200-day moving average near 97.70. With the spike lower to the lows of December 13th, it opened the door for another move lower to the 96.59 level as possible a decisive move lower away from the channel!
Source: Tradingview, FOREX.com
As a result of the US Dollar move, related pairs such as EUR/USD and GBP/USD are also having a big day.
EUR/USD is up 75 pips near 1.1170 and looking to retest the highs from December 13th and the 61.8% Fibonacci retracement level from the June 25th highs to the October 1st lows near 1.1207.
Source: Tradingview, FOREX.com
GBP/USD is up over 100 pips near 1.3090 and looking to test the 38.2% Fibonacci retracement level from the spike higher on December 12th after the election to the low on December 23rd at 1.3137. Resistance above isn’t until 1.3210, which is the 50% retracement level.
Source: Tradingview, FOREX.com
Watch for these trends continue into year end early next week!
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2025