Is the Dollar Done Falling? Historical Trendline Signals a Rebound

The U.S. Dollar Index (DXY) is showing signs of life again. After months of weakness, the greenback has bounced sharply off a 15-year trendline, a level that has historically marked major turning points for the U.S. dollar.

At its latest close near 100.07, the DXY is at its strongest level since the beginning of 2025, hinting that a medium-term rebound could be underway.

A Familiar Pattern in Play

This trendline has been tested only twice in the past decade — first in 2011, then again in 2021. Each of those tests was followed by a period of dollar strength fueled by U.S. economic recovery and a tightening Federal Reserve policy cycle.

The current rebound seems to be following a similar playbook. While rate cuts typically weigh on the dollar, this time investors had already priced in the Fed’s back-to-back quarter-point cuts in September and October. As a result, the recent weakness may have been overdone.

Fed’s Cautious Easing Supports the Dollar

In his latest remarks, Fed Chair Jerome Powell described the recent rate cuts as “risk management” measures, not the start of a prolonged easing cycle. That subtle but critical distinction has helped limit downside pressure on the dollar.

Market data tells the same story: the probability of another cut in December has fallen to 70.1%, down from 90.5% a few weeks ago. Investors are now reassessing whether the Fed will stay on hold longer than previously thought.

Global Backdrop Adds Tailwinds

Beyond U.S. policy, the dollar’s relative strength is being reinforced by sluggish growth in Europe and Japan, where inflation remains weak and policy easing is still in play.

Meanwhile, the ongoing volatility across global equities has spurred a flight to safety, further lifting demand for the greenback.

Over shorter timeframes, the DXY has gained 0.52% in the past week, 0.51% over the past month, and 1.67% in the last three months. Even though it’s still down 7.78% year-to-date, the recent stabilization suggests the worst may be behind it.

The Technical Perspective

As seen in the long-term chart, the green trendline support dating back to 2008 continues to act as a sturdy floor for the dollar. Each prior rebound from this level has led to multi-quarter rallies.

Unless the index breaks decisively below this trendline, currently around the 98–99 zone the technical setup favors further upside in the months ahead.

Bottom Line

The U.S. dollar appears to have found its footing. With Fed policy turning more balanced, global growth differentials widening, and technical support holding firm, the greenback could be entering a new phase of consolidation and gradual recovery.

While short-term volatility remains, history suggests that betting against the dollar at major support levels has rarely paid off.