US Dollar Outlook: Bulls Resurface, Breakout on the Cards?
By Matt Simpson, Market Analyst
Date: 25/03/2026
Summary
The US dollar is showing signs of regaining bullish momentum, driven by a notable shift in futures positioning and an improving technical structure on the daily chart. While the near-term price action suggests a potential breakout, longer-term charts indicate that any strength may be corrective within a broader bearish cycle.
US Dollar Analysis
The US Dollar Index (DXY) is beginning to rise on the daily chart, indicating a possible breakout aligned with a five-wave rally pattern. A break above 100.50 could target 101 initially, with a Fibonacci projection suggesting a potential move above 102, coinciding with an open gap from April.
Technical Structure
The daily chart reveals a strong uptrend for the USD since its January low, following a five-wave impulsive move. The current pullback is attempting to hold above significant support levels, with bulls eyeing a low of 98.65 as a potential base for wave 4. A bullish engulfing candle pattern hints at building upside momentum, although a deeper retracement could extend towards the 200-day EMA at 98.33.
Long-Term Outlook
On the weekly chart, the analysis suggests that the 2022 high marked a significant top for the US dollar, with the January 2025 high forming a lower high. This could indicate a broader bearish trend resuming, potentially leading to a break below 94 later this year.
Futures Positioning
Recent data shows traders have shifted to a net-long position on the US dollar, with net-long exposure reaching $5.3 billion, marking the most aggressive weekly build since January 2019. Asset managers have increased their net-long exposure to a one-year high, indicating a growing bullish sentiment.
Market Correlations
The US dollar remains a key driver in FX markets, showing strong inverse correlations with major pairs like EUR/USD and GBP/USD. However, correlations with AUD/USD have weakened, suggesting that the Australian dollar is influenced more by its own economic factors. Additionally, the relationship between gold and the USD has diminished, indicating evolving market dynamics.