The Dollar Index (DXY) has experienced a significant decline since President Trump’s tariff war intensified global trade tensions. From its peak on September 26, 2022, the Index has exhibited a clear bearish sequence. This decline aligns with an Elliott Wave structure, offering insights into potential future price action.
The current bearish sequence is unfolding as a corrective zigzag pattern, labeled ((A))-((B))-((C)). Waves ((A)) and ((B)) have completed, and the Index is now in the ((C)) leg. Wave ((C)) leg subdivides into a strong five-wave impulse to the downside. Based on Fibonacci extensions, the projected target for this decline lies between 85.5 and 94.9. This corresponds to the 100% – 161.8% Fibonacci extension levels from the prior structure. This zone represents a critical support area where buyers may attempt to step in.
In the shorter cycle, the DXY is expected to face resistance in a 3, 7, or 11-swing corrective rally. As long as the pivot at 103.5 holds, the bearish momentum should persist, driving the index toward the Fibonacci target zone. Traders should monitor these levels closely, as a break above 103.5 could invalidate the immediate bearish setup, while continued failures at resistance reinforce the downside bias.
This Elliott Wave outlook suggests the DXY remains vulnerable, with the tariff war’s ripple effects continuing to pressure the dollar. Stay vigilant for price action near the 85.5 – 94.9 range for potential reversal signals.
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