US Dollar tests 100 breakout as divergence warns of DXY pullbackUS Dollar IndexTHINKMARKETS:USDINDEXThinkMarketsThe US Dollar Index is on track for its strongest monthly gain since July 2025, rising nearly 3% in March as safe-haven demand surged during the Middle East conflict. But despite that strength, DXY appears to be struggling to establish itself above the key 100 psychological level, with traders watching whether the breakout can hold until Wednesday’s close. Geopolitical headlines remain the main macro driver. President Donald Trump said the US is in serious talks aimed at ending the conflict with Iran, but he also renewed threats against Iran’s energy infrastructure, while thousands of US Army paratroopers have arrived in the region as the military buildup intensifies. That keeps the broader dollar narrative supportive, but technically, fading momentum could be an early signal of locking in profits. Key topics covered - March safe-haven rally: DXY is closing Q1 with a powerful monthly gain after January weakened and February was mixed (inside bar), confirming the dollar's role as one of the market’s preferred havens during geopolitical stress. - The 100 breakout test: The key question now is whether the index can deliver another daily close above 100 and confirm that this is a genuine breakout rather than a temporary push above resistance. - RSI divergence warning: On the daily chart, price has pushed higher while momentum has not kept pace, creating a clear bearish divergence. That does not imply a macro reversal, but it does increase the probability of a technical correction from current levels. - Broadening pattern resistance: The chart still resembles a broadening formation, and current price action is approaching a major resistance cluster between the 38.2% and 61.80% extension zone, roughly 100.90 to 101.10. DXY scenarios & trade plan: - Bearish technical correction: This is the short-term setup. As long as DXY trades into the 100.70 to 100.90 area, and especially if it stretches toward 101.00 to 101.10, that zone can be treated as resistance for a tactical short trade rather than a macro bearish call. A stop can sit just above 101.10/101.20, with downside targets at 100.00 first, then the 99.70 area, followed by 98.90 and potentially 98.50 if profit-taking accelerates. - Bullish continuation: If the index breaks cleanly above 100.90 and then 101.10, the bearish divergence starts to weaken and the breakout gains more credibility. In that case, the move higher is no longer a false break above the November high, and the door opens to a broader continuation instead of the pullback scenario. So the bias here is downside for a technical correction, not because the dollar's macro safe-haven story is broken, but because the chart is stretched into resistance while momentum is fading. The plan is simple: watch the 100.70–101.10 resistance zone, respect 100 as the first profit area on shorts, and stay flexible if headlines on Iran suddenly shift sentiment again. Are you fading the breakout above 100 or waiting for confirmation above 101 first? This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.