Post-FOMC US dollar surge shifts global markets – DXY outlook

[Ben Graham]

A theme that had been building throughout this entire year was how a compromised Federal Reserve independence, combined with a more isolationist US policy (and de-globalization), would send the US dollar into shambles.

In fact, this theme has been a favorite for Market enthusiasts, particularly as a compromised US dollar would participate in a rewiring of all financial flows.

Since COVID, a spectacular rise in the USD supply has ramped up inflationary pressures, which got exacerbated by ever-higher government spending, hurting confidence in Fiat currencies.

Particularly after the surprising dovish shift from FED speakers, initiated by Trump-appointed Governor Waller and Bowman, Market participants were afraid of a US central bank that would be pressured by the Trump administration and influenced in its activity, further hurting the Greenback.

This turn accelerated even more after Powell's recent appearance at the Jackson Hole Symposium, which is known for providing market-shambling speeches from central bankers.

It was argued that the speech wasn't as dovish as interpreted, but metals flying higher decided otherwise.

Now, the tides have calmed: the Wednesday press conference, combined with a not-so-dovish 25 bps cut, has proven early dovish speak to be justified, and the US dollar, which had seen catastrophic days leading to the September meeting, is now making a sharp comeback.

Let's examine multi-timeframe comprehensive charts of the Dollar Index (DXY) to see how this change may affect US dollar flows in the long run.

Read More:

• Caution Over Speed: How the Fed Framed Its First Cut
• Gold (XAU) and Silver (XAG) find selling pressure from the post-FOMC stronger US dollar
• Markets Today: BoJ Deliver Hawkish Hold, UK Retail Sales Beat, DAX Prints Morningstar Candle Pattern. Trump-Xi Phone Call Ahead

A re-upload of how US dollar movement influences metals

Dollar Index and Metals comparative Performance since beginning August, September 19, 2025 – Source: TradingView

This chart was uploaded on a piece published yesterday on metals (referenced just above) and is very pertinent to how USD ups-and-downs have a huge influence on trajectories for all asset classes, and particularly commodities.

A Dollar Index (DXY) multi-timeframe comprehensive analysis

Dollar Index daily chart

Dollar Index Daily Chart, September 19, 2025 – Source: TradingView

This Daily picture overlook retraces back to how volatile FX and US Dollar flows have been since September 2024.

Between immense buying flows at the end of 2024, followed by a n-shape downard reversal for the USD throughout 2025, volatility-enthusiasts got exactly what they needed.

You may observe the different themes and dynamics directly on the chart, but one thing to observe is how the most-recent fast-paced fall right ahead of Wednesday's FOMC meeting has been met with a consequent huge rally, with buying flows seeing continuation in today's session.

We'll see more details on this on the short-timeframes, but a clear double bottom has taken shape – The rest will be to see how this will influence markets looking forward.

Dollar Index 8H chart and levels

Dollar Index 8H Chart, September 19, 2025 – Source: TradingView

Looking closer, we spot how sharp the rebound has been after a huge pre-FOMC descent which surprised Participants.

Such hedging can occur, particularly ahead of such market-changing events, but the pace and shape of it was one of panic.

The immediate reaction to the dot plot created new 2025 lows, but looking further, an inability of sellers to close below the June lows, supplemented by a switch in the dollar fundamentals has created another environment for a rebound.

Nonetheless, the buying is currently stalling at the 200-period Moving Average just above the lows of the August range, acting as momentum pivot.

Moving above the MA would further amplify the upward reversal.

A rejection here, supplemented by a close below the pivot zone (97.25) would send the dollar to another wave of correction.

Levels to watch for the Dollar Index:

Support Levels:

• 97.25 to 97.60 current pivot, low of August range
• Major support at the 2025 lows 96.50 to 97.00
• 2025 lows 96.20

Resistance Levels:

• MA 200, immediate resistance 97.90
• 98.00 August Mid-Range, acting as resistance
• 98.50 to 98.80 Resistance Zone
• 100.00 Main resistance zone

Dollar Index 1H chart

Dollar Index 1H Chart, September 19, 2025 – Source: TradingView

Looking closer to the 1H timeframe, we see how far and fast the reversal in the Dollar went, bringing the index back above its pivot zone and just above the Pre-FOMC downward trendline.

Buyers will need to hold the retest of that trendline to maintain the path above (located right within the pivot) as overbought conditions put a short-term top to the move.

Now, the rest will be to monitor if sellers to enter here again, invalidating this theme, but momentum doesn't look that way too much – Always keep an open-eye in case a reversal back down happens from here.

Safe Trades!

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