DXY: Is the Dollar about to crash? – October 2026US DOLLAR CURRENCY INDEXINDEX:DXYwithout_worriesSYMBOL: TVC:DXY | DIRECTION: SHORT | TIMEFRAME: 23-Day Published: October 2026 The dollar index is back at 101.78, inside a band between roughly 101 and 103.5 that has now mattered three times in a decade. January 2017: rejected, then fell 13.96%. April 2020: rejected, then fell 12.60%. 2025: made a lower high at 110, then fell 11.91% straight back into the band. If you hold risk assets then those two dates will mean something to you. They were among the finest entries of the last ten years for long positions, and almost nobody recognised them at the time. On the above 23-day chart the DXY has returned to the 101 to 103.5 band from below, inside a rising channel that carries the shape of a bear flag, while RSI prints a lower high within its own ascending channel. Three reasons exist to expect rejection. They include: 1) The legacy support & resistance has produced the same outcome three times. Declines of 13.96%, 12.60%. Two separate macro regimes, three near-identical measured moves. A level that produces the same magnitude of reaction across a decade is not coincidence, it is where large positions get unwound. The projected move from here is 12.265 points, or 11.91%, which lands the index near 89.5. 2) The rally into it is a bear flag, not a recovery. Price fell from 110 to 97, then has climbed back in a narrow rising channel on diminishing conviction. That is the textbook shape of a correction within a downtrend rather than the start of a new advance. The 2025 high was a lower high against 2022. Lower highs are how downtrends breathe. 3) The fiscal arithmetic has not improved. The dollar’s share of global reserves sits near 57%, against roughly 71% in 1999. Morgan Stanley has flagged that the deteriorating US fiscal position could undermine the safe-haven appeal of Treasuries. Nobody serious expects the dollar to be replaced, and this idea does not claim it will be. Marginal erosion is quite enough. A reserve currency does not need to be dethroned to fall 12%, it only needs fewer buyers at the margin than it had last year. Were markets bearish at those previous tops? Not in the way you would expect. This is the part worth sitting with, because the two tops had almost opposite moods. January 2017 arrived after the US election, with the reflation trade in full voice. The consensus call was euro-dollar parity. Everyone was long the dollar and cheerful about it. What followed was a 9.9% annual decline in the index, a superb year for emerging markets, emerging currencies up around 5.2% against the dollar, and Bitcoin moving from roughly $1,000 to nearly $20,000. Nobody was frightened. They were simply all standing on the same side of the boat. April 2020 was the exact reverse. The March crash had just taken roughly a third off global equities and the dollar spike was a funding panic, the entire world scrambling for the one thing it owed money in. Sentiment was not merely bearish, it was apocalyptic. Then the Fed opened the taps, the dollar rolled over, and risk assets went on one of the great runs in living memory. So one top came at peak optimism and the other at peak terror. What they shared was not sentiment. It was crowding. Both marked the moment when everyone who was going to own dollars already owned them, whether out of greed or out of fear. After that there is nobody left to buy, and the only available direction is down. Side note: From both public and private Ww groups it is worth sharing the number of followers who have informed me they’ve taken a cash position in preparation for the “AI crash”. It is a number that has grown into double digits over the last several months. While it seems like the smart thing to do, you’re fixing in a loss in purchasing power. Not even Gold will protect you from this loss like many influencers are currently suggesting. Today the prevailing view is that de-dollarisation is overstated, the reserve role is secure and rate expectations will hold the currency up. That may well be correct. It is also, once again, a great many people standing on the same side of the boat. What a falling dollar means if you have debt Debt is a nominal promise. The number on your mortgage statement does not move when the currency loses value, but what that number can buy does. Which means a fixed-rate mortgage is, in plain terms, a leveraged short position against the currency it is denominated in. You have borrowed something you expect to become less valuable, to buy something you expect to hold its value. Most people who did this think of themselves as sensible homeowners rather than macro traders. They are macro traders. They’re just not aware of it, which is probably why they sleep better than the rest of us. Two conditions decide whether this actually works for you. The rate must be fixed, because variable debt simply reprices and swallows the benefit. And your income must broadly keep pace with prices, because the real burden only falls if what you earn rises while what you owe stays still. Wages historically lag inflation rather than lead it, so the relief arrives late and the squeeze arrives first. Unsecured credit at 20% and above is not eroded by anything. It compounds faster than the currency debases, which is the entire business model. And if you have no debt You pay for it. Currency debasement does not create wealth, it moves it. Every pound of real burden that leaves a borrower arrives somewhere, and it arrives with whoever is holding the currency. Cash savings, fixed annuities, long-dated bonds bought at low yields, and anyone living on a pension that is not properly index-linked. These are the counterparties to the debtor’s quiet windfall. Note what that does morally, which is nothing good. The person who borrowed heavily is rewarded. The person who saved diligently, avoided debt and kept money in the bank because that is what sensible people do, is charged for the privilege. It is a tax that nobody votes on, nobody announces, and nobody can opt out of by holding cash, because holding cash is how you pay it. The defence, such as it is, has always been ownership. Things rather than promises. Productive companies that can raise their own prices, property, commodities, and the scarce assets that exist precisely because people have been here before. That is why the 2017 and 2020 dollar tops sit in the memory of anyone who held risk assets. Not because the dollar fell, but because of what owning something instead of cash did for them over the two years that followed. The honest bit Crash is the wrong word and I am not going to pretend otherwise. A move of 12% in a major reserve currency over a year or two is significant, consequential, and entirely normal. It is not a collapse. Currencies that genuinely collapse do so in months and take their bond markets with them, and nothing in this analysis suggests that. The counter-case is reasonable. ING (Dutch bank, headquartered in Amsterdam) reads the 2026 weakness as cyclical rather than structural and notes no broad deterioration in dollar usage metrics since 2024. Reserve share has been eroding at a glacial pace for twenty-five years. The dollar rose in the first half of this year on expectations of FED tightening, and if those expectations harden the band breaks upward rather than rejecting. Also worth stating plainly: the inverse relationship between the dollar and risk assets is a tendency and not a mechanism. One analysis found it has never persisted beyond about seven weeks at a stretch, so plan accordingly. Supports • 1st support: 97.0. The 2026 low and base of the rising channel. • 2nd support: 92.6. The 2017 low. • 3rd support: 89.5. The measured move of 11.91%, which also sits on the 2018 low. A sustained 23-day close above 103.5 puts price through the band and invalidates the structure. Not a wick. A close. The crowd Nobody is positioned for this (obviously), because the dollar is not an asset most people believe they hold an opinion about. They hold it by default. Their salary arrives in it, their savings sit in it, their pension is quoted in it and at no point did anyone ask them whether they wanted that exposure. It is the largest undeclared position almost everyone owns. Except for us Europeans. Which is why the two previous occasions passed almost entirely without comment, and why both are now remembered as obvious. Two visits to the same band. Two rejections of roughly the same size. One lower high and a rising channel that looks exactly like what it probably is. Look left. Is this time different? Good luck. Ww Type: Macro / currency structure | Timeframe: 12–24 months ======================================================== Disclaimer: This idea is for educational and informational purposes only. It is not financial advice, and nothing in it is a recommendation regarding borrowing, mortgage arrangements, savings or pension provision. Decisions about personal debt and retirement income should be taken only with a qualified, regulated adviser who knows your circumstances. Levels described are observations of chart structure, not price objectives. Historical analogies carry no predictive guarantee and the relationship between the dollar and risk assets is a tendency rather than a mechanism. Reserve share, index level, historical return and market commentary figures are drawn from third-party sources at the date of publication, vary between providers, and have not been independently verified. Short positions carry the risk of unlimited loss. Always do your own research and consult a qualified financial adviser before making any investment decisions. Past performance is not indicative of future results.