Falling fast, but never alone: The DXY, the PPT, and the power play

The US Dollar is faltering but in no way, it should be counted out yet. And it is ludicrously limping across the charts like a marathon runner in the 25th mile: wet, gasping and struggling to recall why indeed she or he ever got into this race in the first place.

Looking at the 4-hour chart of the Dollar Index (DXY) we are reminded of a lesson of the patience of the bull. It is a bad breakup, as seen in the way the structure is disintegrating, hints of estrangement followed by a plunge through current levels. The dollar has found itself in a bearish channel since it could not manage to retest the high of June which was just about 99.60 capping sell orders, which are closed the door. It is printing lower highs and lower lows just like a printer that only prints pessimism.

Then there is the ever-trusty 9-period EMA that is now a strict ceiling to the formerly rampant trend-followers. All bullish attempts have been frustrated as a tennis ball hitting the brick wall. At this point, the price action has skated straight through 97.50-previously a support level in the later part of May-and is hovering at 97.14, "meanwhile, the momentum has slipped quicker than the Treasury credibility after an unexpected spike in CPI.

Even candles themselves are listless--long wicks, feeble closes. There is no panic there but it is certainly not poise either.

The meltdown of the dollar is not its first such experience. Technically, the nosedive was very similar to the one we witnessed back few weeks in late April, when the index fell to 99.70 after poor labor reports. That fall, was quickly stopped- not by chance, but the U.S Treasury had auctioned more than anticipated amount of short-term bonds. Tightening that action pulled up yields, and along with that came a demand of the dollar. An expeditious, unstrenuous rescue.

Will history repeat? Possibly.

It is simply because this is not a market in which trading is performed by solely relying on EMAs and RSI. It involves geopolitics, financial strength and what is known as tariff leverage, a dull-sounding term that soon shapes billions of dollars in capital movements.

To begin with the elephants, there are the big elephants China and trade tariffs. The negotiations are back on, at least, with all the amity of a kidnapping of hostages, but they are back. The two giants are reforming tech-sector tariffs, with most of them set during the 2018 2020 trade war. As a background, tariffs by the United States on Chinese goods are still tariffs totaling more than US$300 billion of imports, with semiconductors, EV parts and telecom equipment following the main disputable bones. Mere talk of de-escalation in that arena is able to put dollar flows out of kilter as multinationals realign FX risks.

Next, there is the U.K. deal, which was negotiated earlier this month, reducing digital service taxes and opening up American exports of EV and green energy components to the British markets. In the current framework, it is estimated that by 2026, American exporters will be spared a tariff burden of close to 2.4 billion US dollars. Not only does this increase U.S. trade statistics, but it increases world demand of dollar which many have been invoiced and executors in U.S. dollar.

And do not forget about the role of the dollar in the energy diplomacy. The U.S negotiations in the Middle East have avoided what would have been the cause of increased oil prices and pandemonium in the emerging markets as the shipping lanes in the Red Sea have remained open. And back in South Asia, backdoor negotiations with the blessing of the U.S. turned down the temperature of recent airspace clashes between the nuclear powers of India and Pakistan another potential ding to the popularity of the FX market, at least among oil-dependent economies.

Technically, the indicators follow a strongly bearish trend. The Relative Strength Index (RSI) is at the risk of being oversold yet it is not willing to commit. The MACD? Turned into a horror story to bulls, as it plowed below the zero line on June 24 th, and widened like a pothole in policy credibility. Prices indicate that the next big technical support lies around 96.80, a price that repelled in March. The decline to below the level can be seen as opening the gates to 95.70, still don not expect it to be a free fall.

Why? Because when the dollar falls too hard, it simply does not fall to the floor, but too mysteriously there always seems to be a cushion there just when someone needs it now.

No, no, it is not cowboys with bugles, this is not regular army. It is in the form of unexpected Treasury bond auctions, off-the-record comments by central bank officials, or even market-friendly headlines handed conveniently on a silver platter at just the correct time. It is luck according to traders. It is termed pattern by the veterans. Conspiracy buffs refer to it as the Plunge Protection Team a nefarious combination of policymakers, Fed brains and financial wizards who are reported to step in when the whole show threatens to topple. And they may or may not be “officially” pulling strings but strangely enough the effect is pretty much the same, the dollar gets a trampoline beneath its feet and at the moment when it looks like it is about to go crashing through the floor.

Therefore, in case you make an obvious gamble with a freefall then just take a note, this money works with airbags.

Remind yourself: it does not only concern momentum, but it is about meaning.

And the dollar meaning is sewed in every financial corner of the globe. Trade deals? It is done in dollars. Crises? Dollared. When the nations express discontent with such “de-dollarization” one wonders what they reserve? That’s right—USD. IMF statistics show that as of Q1, 2025, more than 58 percent of world FX reserves are still held on dollars. Euro is at 20% second followed by the Chinese yuan? The percentage is less than 3%.

Therefore, it is gloomy indeed. That is correct, short term momentum responds, short me, baby. That is not a meme coin though. And it is the backbone of financial diplomacy and world trade. And each time that people count it out, it tends to resurface with receipts and rates increases.

The candle can be trembling. but the flame? Still global.

You see, when war breaks out, when diplomats start out on peace negotiations, when tariffs are concluded or cancelled-- there is one currency the world picks on as a guaranty of stability, settlement and big business.

And it still is green.