Dollar Index Rises Amid Shift in Trump Rhetoric, Eyes Key Resistance Levels

The dollar index edged higher on Monday, opening with a gap up as markets reacted to a significant shift in President-elect Donald Trump’s rhetoric. Trump moved from advocating for a weaker dollar to combat trade wars to issuing threats against BRICS nations, warning of 100% tariffs if they create or support alternative currencies aimed at replacing the U.S. dollar.

This fresh dollar strength marks an initial signal of a potential reversal after a four-day pullback, which was contained by the rising channel support trendline, reinforced by the daily Kijun-sen around the 105.60 zone. However, further gains are needed to confirm the reversal signal.

A break above immediate resistance at the 106.50 area (the 38.2% Fibonacci retracement of the 108.04/105.57 decline and the 10DMA) would strengthen the near-term outlook, paving the way for a test of the next pivot at 106.81 (50% retracement and daily Tenkan-sen). A decisive move beyond this level would suggest the corrective phase has concluded and shift the focus firmly higher.

The daily technical outlook remains bullish, supported by positive 14-day momentum, which is turning upward, a stochastic rebound from oversold territory, and converging 55DMA and 200DMA lines hinting at a potential Golden Cross formation.

As long as the index remains within the month-long bullish channel, the near-term bias is expected to stay upward, pointing to a steady continuation of the broader uptrend.

Res: 106.50; 106.81; 107.10; 107.46
Sup: 106.09; 105.60; 105.32; 105.00