Market Analysis Summary: US Dollar Index (DXY) Trends
Author: Elior Manier
Date: February 17, 2026
Overview
The US Dollar Index (DXY) is currently attempting to break a downtrend that has persisted since 2026, despite facing significant bearish positioning not seen in 14 years. The dollar has shown resilience following the nomination of Kevin Warsh as the next Federal Reserve Chair, amidst a backdrop of weaker-than-expected inflation data.
Current Market Sentiment
Since the beginning of 2026, the US Dollar has experienced a downturn, influenced by narratives suggesting a diminishing role for the dollar in global markets, particularly in light of the Greenland Crisis and former President Trump's efforts to devalue the currency. The DXY reached five-year lows before Warsh's nomination, which has sparked speculation about potential shifts in monetary policy.
Technical Analysis
Dollar Index (DXY) Daily Chart as of February 17, 2026
The DXY has rebounded from its January lows and is attempting to break out of a downward channel. Currently, it is trading around the 97.50 mid-range pivot area, with bears holding a slight advantage. However, the market sentiment suggests that the bearish positioning may be overstretched.
Key Levels to Watch
For traders, the following levels are critical:
- Resistance Levels:
- 97.25 to 97.60 (August and mini-range Pivot)
- 98.80 to 99.00 (Mini-resistance)
- 99.40 to 99.50 (January Resistance)
- 100.376 (November highs)
- Support Levels:
- 97.08 (4H 50-period MA)
- 96.50 to 97.00 (2025 Lows Major support)
- Below 96.00 (Early 2022 Consolidation)
- 95.55 (Trump USD Flash Crash)
- 95.00 (Main psychological support)
Market Outlook
As the market awaits the upcoming Non-Farm Payrolls data, a positive surprise could trigger a short-squeeze in the dollar. Additionally, the Supreme Court's announcement regarding Trump's tariffs could lead to mixed reactions, potentially impacting the dollar's trajectory.
Conclusion
In summary, the US Dollar Index is at a pivotal point, with traders closely monitoring key technical levels and upcoming economic data. The current bearish sentiment may be overextended, and any positive economic indicators could lead to a significant shift in market dynamics.
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