DXY Holds Above 106, Currency Markets at Risk?U.S. Dollar Currency IndexTVC:DXYFOREXcomThe US Dollar Index (DXY) remains firm above the 106-mark, applying pressure on the latest currency market rebound amid escalating tariff and trade war concerns. With the first wave of tariffs on Canada and Mexico set to take effect in early March, Trump's renewed tariff threats against the EU are further strengthening the Dollar's stance. This has kept the EURUSD capped below 1.0530 and GBPUSD struggling at 1.27. Friday’s key inflation reports—including the German Prelim CPI and US Core PCE—are expected to introduce additional volatility risks. 🔻 Downside Scenario: A break below 106, aligning with June 2024 highs, could expose the next support at 1.0520, coinciding with the upper boundary of the declining channel connecting lower highs from October 2023 to June 2024. Further declines could see DXY testing 104 and 102.20, aligning with the 50% and 61.8% Fibonacci retracement levels. 🔺 Upside Scenario: A solid close above 107.30 could reignite bullish momentum, pushing DXY towards the 2025 high of 110, potentially derailing the currency market’s 2025 rebound. - Razan Hilal, CMT