The US Dollar falls off to start the week

[Redator]

The US Dollar has started to show some signs of relative weakness after an almost flawless beginning to July.

Between a rebirth in Tariff talks, extended until the 1st of August and some general volatility in global Geopolitics, there has been some sell-side covering for the Greenback.

The rally has (at least for now) concluded through last week's bout of Middle East tensions (with intense Syrian local conflicts), encouraging PPI Data and FED's Waller starting the Blackout Period from the US Central Bank with some repeating of his dovish comments.

For those who haven't seen the headlines, Japan's Prime Minister and his electorate have lost the majority which has created some movement in JGBs (Japanese Governement Bonds) and led to a strengthening of the Yen (with Japan markets off today) – Another contributor of a weaker dollar to start the week  – USDJPY is down close to 1% on the session.

Markets were also concerned by talks around Jerome Powell, whose term finishes in May 2026, getting fired from his FED Chair role – US Treasury's Scott Bessent has denied such outcomes, however markets had still sold off some treasuries which trickled to the Dollar on the last weekly close – Any possibility has to get priced in!

Let's take a look at what technicals indicate to spot potential trends for this starting week.

Read More: Japan Election Results Add to Yen Uncertainty, Earnings Season Continues and FTSE 100 Hovers at 9000

Dollar Index Technical update

Dollar Index 1H Chart

Dollar Index 1H Chart, July 21, 2025 – Source: TradingView

The Dollar came shy of the 99.00 psychological handle – A failure to breach that landmark has been seen as a sign of weakness despite a solid July tenure and some testing of higher levels through risk-off spikes.

Failed patterns and breaks are the best signs for reversals, and the last spike on Thursday to form a double-top was a good example for this.

Since, the Index is down close to 1 full handle, with prices consolidating in the 98.00 Pivot Zone (+20 pips) and currently breaking the psychological level.

Sellers are taking the momentum, as they are currently pushing through the 97.98 overnight lows pursuing the break-retest of the July Channel.

Watch for other currency pairs and assets how this dynamic trickles – Gold is also up 1.10% on the session and close to $3,400.

Stepping back to the 4H Chart

Dollar Index 4H Chart, July 21, 2025 – Source: TradingView

There is a move down ongoing, which gets also reflected in the 4H RSI trading below its neutral zone (neutral is typically close to the middle line).

There has been a golden cross between the 50 and 200 MAs on Friday which led to some bull candles, however such technical patterns can come late and have done just that.

Buyers will look at the 97.60 Support Zone (+/-10 pips) to show some presence – Selling outflows from the US are still potentially massive with the short-term positioning having became more neutral in the past two weeks – Still, the week is young and markets will have to slow down a bit towards next week as they will prepare for the July 31st FED Meeting.

Levels to place on your charts:

Support Levels:

• 97.60 Support Zone (+/-10 pips)
• 97.30 last pivot before run-higher
• 96.50 2025 Lows

Resistance Levels:

• 98.00 Major Pivot Zone (50 and 200 MA Confluence)
• 98.50 Gap/Resistance Zone
• 98.95 to 99.00 Last week highs
  
  
  Safe Trades and successful week!

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