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19.12.202500:47 Forex Analyse & Reviews: DXY. Price Analysis. Forecast. The U.S. Dollar Faces Challenges

Relevance up to 09:00 UTC--5

Exchange Rates 19.12.2025 analysis

On Thursday, the U.S. Dollar Index (DXY), which tracks the dollar's value against a basket of currencies, was struggling to build on the moderate gains seen the previous day. After the release of disappointing U.S. Consumer Price Index (CPI) data, Wednesday's gains were completely erased by downward pressure. This data will play a crucial role in determining the next steps the Federal Reserve will take regarding interest rates.

Despite the Fed's cautious outlook, amid clear signs of a weakening U.S. labor market, traders are pricing in the possibility of two more rate cuts in 2026. Additionally, there are rumors that the new Fed Chair will adopt a dovish monetary policy and, under political pressure, will further lower interest rates. Furthermore, according to U.S. President Donald Trump's statement on Wednesday, the next Fed chair will be someone who advocates substantial rate cuts.

However, Federal Reserve Governor Christopher Waller—one of the five finalists to succeed Jerome Powell—stated that he would emphasize the importance of central bank independence specifically for President Trump. This assertion had a positive effect on the dollar's value, providing some support. Overall, however, fundamental indicators remain bearish, suggesting the U.S. dollar's path of least resistance is downward.

Even from a technical standpoint, Wednesday's and Thursday's declines near the key 100-day moving average indicate short-term negative sentiment.

Therefore, any attempts at recovery should still be viewed as selling opportunities. Moreover, the oscillators on the daily chart are showing negative signals, and the 100-day SMA, currently at around 98.60, serves as the primary near-term resistance for any upward movement.

Immediate Support and Resistance Levels:

  • Support: 98.10, approaching the round level of 98.00.
  • Resistance: 98.60 (100-day SMA).

In summary, the U.S. dollar faces challenges ahead, and traders should remain cautious in their strategies as the market reacts to macroeconomic data and central bank decisions in the near future.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2025
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