• DXY struggles below support as bond yields drop and the QT slowdown fuels bearish sentiment.

  • Double top formation signals weakness, with resistance near 110.500 limiting recovery.

  • Breaking 103.600 support fuels selling pressure while downside risks extend toward 100.000.

The U.S. Dollar Index (DXY) is showing signs of sustained weakness as it struggles to maintain critical support levels. A head and shoulders pattern, combined with macroeconomic factors, suggests the possibility of further downside movement.

Key Technical Levels and Market Breakdown

The structure of the DXY is deteriorating; a small rally may be observed before a more pronounced breakdown.  Bearish sentiment is being augmented by declining bond yields and expectations of slowing Federal Reserve quantitative tightening (QT).  The dollar is being further pressured lower due to these circumstances, which makes a long-term rebound more difficult.

A technical study conducted by Ted Pillows highlights the DXY’s persistent struggles on the 12-hour timeframe. He noted that since September 2024, the index has repeatedly tested resistance but failed to sustain upward momentum. The price opened at 102.948, peaked at 104.223, hit a low of 103.759, and closed at 104.146, reflecting a modest 0.19% gain.

Source: Ted Pillows

Ted Pillows observed that the historical price action indicates a double top formation, a strong bearish reversal signal. He noted that the first peak formed in November 2024, followed by a correction and a retest in February 2025 above 110. After failing to maintain these highs, the index entered a sharp downtrend, eventually breaking the 103.600 - 104.000 support zone in April 2025, leading to intensified selling pressure.

Future Projections and Market Sentiment

Insights from Ted Pillows suggest that the DXY is now trading decisively below previous support, confirming a structural breakdown. He observed that the yellow-highlighted segment of the chart signals an extended bearish phase, raising the probability of continued declines.

Ted Pillows noted that resistance remains firm near 110.500, where previous rallies faced repeated rejections. If the downward momentum continues, DXY could test the 100.000 level or lower. However, he observed that if buyers regain control, the index may attempt a retest of prior breakdown zones. His analysis provides a structured view of the evolving DXY trend, helping traders assess potential movements.