Weaker dollar, loud message

The US Dollar is losing momentum fast after failing to reclaim a key resistance zone, and bears are now pushing for another leg lower.

At the same time, gold is taking full advantage of that weakness and just powered through major upside levels. Today is all about watching whether the dollar keeps bleeding - because as long as it does, metals stay in the driver’s seat. 

USD Index (DX.F): Bears are back in control

Let’s open today’s Lab Note by revisiting the quote from Jan. 14 (Lab Note #71):

“(…) Friday’s failed move above the upper border of the mentioned rising channel translated into unsuccessful breakout above the 61.8% Fibonacci retracement. Additionally, bulls didn’t manage to close the early-December gap, which together with the current position of the indictors (Stochastic has already printed a sell signal, while CCI is deep in overbought territory and close to rolling over) raises the probability that the dollar’s next meaningful move will be to the south toward the downside targets we’ve already discussed on Friday (…)” 

From today’s perspective, we clearly see that the daily chart shows that despite multiple attempts to break above the resistance zone we discussed a week ago, bulls failed to close the gap, which triggered a strong bearish reaction.

Yesterday’s session opened with another large red downside gap, and when you combine that with fresh sell signals, it basically gave bears a green light to execute the bearish scenario we outlined on Jan. 12 (in Lab Note #67):

“(…) If sellers regain control and close the day under the upper line of the channel, their first downside target will likely be the previously broken area around 98.53. A clean break below that level could expose 98.26, and potentially even a move toward the lower border of the mentioned channel. (…)”

And as we see, the market delivered: sellers pushed DX.F straight down into 98.09, printing a daily low slightly below both of our downside targets during yesterday’s session.

Even though we saw some rebound later, Wednesday opened with yet another red downside gap, which, combined with sell pressure still active, suggests another push lower could be right around the corner.

First downside target? At least a retest of yesterday’s low.

If bulls don’t step in there, the next bearish destination becomes the next major support zone based on the October 6, 2025 upside gap (97.41–97.64) + the 61.8% Fibonacci retracement. At this point, it is worth noting that this important support zone already stopped sellers twice in December, therefore, it’s one of those “watch it like a hawk” areas in the near term. 

USD Index (H4): Breakdown confirmed

Let’s recall one more quote from Jan.14:

“(…) two unsuccessful attempts to go above the channel adds technical weight and strongly suggests the dollar may retest the 98.50 support zone in the near term. (…)”

On the H4 chart, we can clearly see that even though bulls managed to climb above 99, the upper border of the black rising channel + the red resistance zone was simply too much.

After several days of consolidation, buyers finally ran out of fuel, and bears stormed the market.

From this timeframe, we see that the latest decline took the dollar below the lower boundary of the black rising channel, which means that until we see an invalidation of this breakdown, any bounce should be treated as a corrective move inside a broader bearish swing.

Yes, H4 indicators did flash early buy signals, but as long as those daily red gaps stay open and DX.F remains below the channel, bears still have the upper hand.

So… what does this mean for gold?

Last week’s quote turned out to be a good compass for recent price action: 

“(…) As the chart above shows, the U.S. dollar has been rising since the start of the year, while gold and silver have not weakened. In fact, the correlation between USD and metals has increased, not decreased. 

How to read this? 

(…) That doesn’t mean the relationship is broken forever. It means that for now, metals are not reacting negatively to a stronger dollar. Therefore, in my opinion, gold and silver should be analyzed on their own charts now, however, the USD-metals relationship should be monitored, not assumed.

(…) Stay patient: if the dollar rolls over, metals may get an extra tailwind.  

The above chart basically proves why it was worth watching… because the earlier “weird” correlation phase is faded and we’re now sliding back into the classic relationship again.

In simple terms: a weaker dollar is back to acting like fuel for metals, and it’s giving bulls exactly what they need to keep pushing higher.

Nevertheless, keep tracking that correlation because as long as it doesn’t flip again like it did in recent weeks, dollar weakness remains a supportive backdrop for gold and silver. 

Gold (GC.F) : Bulls didn’t just break resistance

In yesterday’s Lab Note, we wrote the following:

“(…) What’s next? 

On the H4 indicators, we can already spot early bearish divergences, but what’s most important, there are no sell signals yet. That keeps the door open for further upside. 

The next logical target sits around 4768-4780, where price may run into resistance cluster created by the upper border of the purple rising channel and the 161.8% Fibonacci extension (marked by the red ellipse on the H4 chart). 

A clean break above that zone could put 4800 firmly back on the radar. 

Looking at gold now, we see that bulls didn’t just clear the resistance zone we discussed… they also pushed cleanly above 4800, which unlocked even more upside momentum (congrats to everyone who followed yesterday’s scenario - you either booked another win or added even more profit on top of an already strong move).

Where can bulls go next? → The full gold breakdown (scenarios + key levels + targets + invalidation rules) is available in Premium Lab Notes. If you don’t want to watch the next move from the sidelines and you’d rather have the plan before the market delivers it - the Premium version is where that happens.

Lab Takeaway

Today’s play is simple: DX.F is the trigger and gold is the reaction. As long as the dollar stays below its broken channel and keeps above mentioned red gaps open, metals can stay bid, but once the greenback starts reclaiming key levels, gold’s rally can cool off fast. (…)

Stay patient, respect the levels, and let the market show its hand.