US Dollar, a decisive technical signal?U.S. Dollar Currency IndexTVC:DXYSwissquoteThe US dollar has now been moving sideways in the floating foreign exchange market, the Forex, for the past 12 months. The US dollar against a basket of major currencies (the ticker is DXY if you are looking for it on TradingView) represents the underlying trend of the US dollar in the FX market, essentially an average against the Euro, the Japanese Yen, and the British Pound. The DXY is by far the benchmark used by institutional traders on trading floors to assess the trend followed by, and potentially to be followed by, the US dollar. Due to market correlations, the underlying trend of the US dollar can have a major impact on stock markets, so the technical decision that will be made is likely to influence financial markets throughout the summer. The US dollar has been rising since the beginning of the year. It has been supported by the geopolitical crisis in the Middle East, and now the possibility of the Federal Reserve raising the federal funds rate is providing additional bullish support. Regarding expectations for Federal Reserve monetary policy, the consensus remains highly divided between a scenario in which the Fed is merely communicating firmly to protect its credibility and another in which it is seriously considering raising the federal funds rate (as the ECB has done). This will clearly depend on the trend in oil prices this summer and on the evolution of core PCE inflation, for which the Fed does not expect a sustained move above 3.3% by the end of the year. However, if the opposite situation were to occur, a rate hike would become necessary. It is this decision by Kevin Warsh’s Federal Reserve that will determine the technical direction taken by the US dollar (DXY). The long-term chart (here using a weekly time frame) reveals an important piece of information: the 100–102 point area is a major long-term pivot zone. In other words, a breakout above it, or conversely a rejection from it, could trigger movements lasting several weeks. Put simply, if the US dollar breaks above 102 points, it could accelerate higher toward 106 points, with a significant impact through inverse correlations, particularly on the price of gold in financial markets. Conversely, if the 102-point resistance triggers a bearish rejection, the US dollar would resume the downtrend that has been in place since the end of 2022. In short, the US dollar stands at a technical crossroads at the beginning of the summer, and the technical signal it provides could have a major impact across all asset classes. The chart below shows weekly Japanese candlesticks for the US dollar (DXY) against a basket of major currencies. 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