The Dollar Index (DXY) has been a central focus for traders and investors alike, reflecting the strength of the U.S. dollar against a basket of major currencies. Over the next two years, the DXY is likely to experience significant shifts driven by economic, geopolitical, and market forces. In my opinion, the Dollar Index is unlikely to sustain levels above 120. While brief fake breakouts or immediate rejections might occur, the likelihood of such levels holding for an extended period appears minimal.

Instead, a heavy downturn seems to be on the horizon. I foresee the Dollar Index potentially crashing to levels below 95 within the next two years. This decline could be driven by various factors, including an aggressive pivot by the Federal Reserve, weakening U.S. economic fundamentals, or increased global de-dollarization efforts. As inflation stabilizes and global economies diversify their currency reserves, the demand for the dollar could significantly diminish.

Technical indicators also support this bearish outlook. Historical price action shows that 120 has served as a key psychological and structural resistance level. The failure to break above this level in the past hints at strong selling pressure near these highs. On the downside, a drop below 95 would signal a major shift in sentiment, potentially opening the door to further declines.

TradingView Link : Dollar Index for Next 2 years

Risk Warning

While technical analysis and predictions provide a valuable framework, trading always carries significant risks. Market conditions can change unexpectedly due to macroeconomic factors or unforeseen global events. It’s crucial to remain cautious and manage your risk appropriately. The Dollar Index’s movements can have widespread implications on forex markets, commodities, and equities, so always consider potential volatility when trading.

These projections should not be taken as financial advice but rather as insights into potential scenarios in the dynamic forex market.