The U.S. dollar, after a significant decline in 2025, is showing a classic technical chart signal (a "golden cross") that historically suggests a potential rebound in early 2026.
Key Points
2025 Performance: A Difficult Year
The U.S. Dollar Index (DXY) has fallen about 9% since the start of 2025.
It was trading near its lowest levels of the year at the time of reporting.
The Bullish Signal: "Golden Cross"
What it is: The dollar's 50-day moving average crossed above its 200-day moving average.
Why it matters: This is a widely watched technical indicator that suggests a shift from a downward to a potential upward trend.
Track Record: This is the 39th such signal since 1970. Historically, after this signal, the dollar tends to be higher 20 to 60 trading sessions later.
Reasons for the Dollar's 2025 Decline
Trade Policy Concerns: Investor fears that President Trump's trade policies could hurt the U.S. global economic standing.
Interest Rate Divergence: Expectations that the Federal Reserve will keep cutting U.S. rates while other major central banks hold steady or hike, making dollar assets less attractive.
The Outlook
The "golden cross" indicates that the worst of the dollar's slump might be over.
It suggests the U.S. currency could strengthen in the months ahead.
In a nutshell: A historically reliable technical pattern is flashing a potential recovery signal for the battered U.S. dollar as it heads into 2026.
