Dollar regains footing as long-term Reversal carves out a Bottom

[Redator]

After failing to trade above the 99.00 psychological handle last Thursday, the Dollar Index had retracted strongly in the beginning of the week – Is the ongoing retracement over?

Other majors have enjoyed from the close to 2% correction in the Index, particularly USDJPY which had been struggling since the onset of July.

Markets tend to move chaotically on the small picture but the bigger picture sometimes offers some great insights.

The US Dollar just marked what is for now an intermediate bottom on its index and this marked the end of the weekly run in European and Asia-Pacific currencies.

Let's take a look at the DXY and a few other major charts to prepare for the month-end to next month trading.

Read More: Is the S&P 500 losing steam?

Taking a look at the US Dollar

Dollar Index Daily Chart, July 24 2025 – Source: TradingView

The US Dollar had marked a bad looking intermediate-top for its higher prospects amid the past month of selling positions closing.

The path of the Greenback, always in the middle of many crosscurrents of macroeconomic and financial micmacs, tends to be complex to forecast on the longer-run.

The ongoing theme in 2025 is one of US Exceptionalism that is scaring financial flows to exit American Markets or at least, strongly diversify from them.

SInce 2008, the United States have captured a huge part of big bank investments. The outflows of such have had a strong impact, but they can't just happen in one shot as it has been the case this month.

The speed at which that happened actually might have been a reason for the now-underweight US Equities asset managers to rush back to American markets on their strong fundamentals, leading to some strong moves to their new all-time highs.

A lot of these reasons have led to the USD still marking a strong bottom at a weekly Head and Shoulders target – 96.50 is the level to keep in mind, the lowest point hit since the beginning of the 2022 hike cycle.

But looking closer, what do we see? Dollar Index 8H Chart

Dollar Index 8H Chart, July 24 2025 – Source: TradingView

The USD is bouncing sharply after retesting both the 2025 Lows Key support zone which coincides perfectly with a retest of the 2025 Channel which had been broken upwards.

The 8H MA 50 is acting as immediate resistance for the Dollar, so this weekly close should be very interesting.

Marking a strong rejection here will point to a consolidation between Wednesday's 97.00 Lows and today's 97.90 Highs.

Staying at the current levels or clsoing above will point to a higher path to the Dollar and a confirmation that the lows of the next few months might have already been attained.

So, what are other major pairs showing?

Potential double top for the EURUSD

EUR/USD 8H Chart, July 24 2025 – Source: TradingView

Watch the 1.17 Handle, acting as key immediate pivot.

USDCAD – Still ranging but strong rally off the lows

USD/CAD 8H Chart, July 24 2025 – Source: TradingView

Price action is still within the range but the ongoing rally is very strong – Watch for reactions around the 1.3750 range resistance.

Next key resistance is one full handle above (1.3850).

GBPUSD breaking below its 2025 Channel

GBP/USD 8H Chart, July 24 2025 – Source: TradingView

Sellers still have to break below the 1.34 support zone but the rejection at the 1.36 Resistance is a bit nasty.

July 2025 lows are at 1.33650

USDCHF – Potential double bottom

USD/CHF 8H Chart, July 24 2025 – Source: TradingView

Buyers will still have to break the strong downward trendline but a double bottom may have freshly formed.

Concluding note

The US Dollar is one of the most complex financial instrument to analyze, but looking at these current charts, there are some signs of a strong change to the ongoing 2025 flows.

If price action for the major pairs stays rangebound from here, it would invalidate the US Dollar strength scenario which is always still a possibility.

Trading is about taking a step back to spot the higher timeframe trends that big participants carve out, and displaying all the potential scenarios while highlighting the ones with the highest probabilities.

Safe Trades!

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