US Dollar Index Analysis: Momentum Builds for a Breakout Attempt

In this comprehensive analysis, Ultima Markets brings you an insightful breakdown of the USDX for July 31, 2025.

Technical Analysis of USDX

USDX Daily Chart Insights

• Corrective Bullish Rally (Short-Term): Following a late June 2025 low, the index has entered a brief counter-trend bounce. Recent price action has pushed above the purple short-term moving average, with the latest candles displaying positive momentum. This upward movement remains corrective within the broader bearish trend unless significant resistance zones are breached. The Stochastic Oscillator has reached deeply overbought levels above 80, indicating the current rally may be overextended and vulnerable to consolidation or reversal.
• Key support area: Should the index be unable to surpass the 98.86 resistance level and retreat beneath the immediate 98.00 support (purple MA), this would suggest the corrective bounce has concluded. A definitive breach below the critical 97.00 support area would confirm the downtrend’s resumption, making a retest of the major 96.46 support highly probable. A closing price beneath 96.46 would validate the ongoing long-term bearish market structure.

USDX 2-hour Chart Analysis

• Potential for Consolidation: The Stochastic Oscillator has entered overbought conditions above the 80 level. Although this validates the current trend’s momentum, it also indicates the market could be poised for consolidation or a modest correction before resuming its upward trajectory.
• Breakout scenarios: In the bullish breakout scenario, a sustained 2-hour close above the immediate resistance at 99.65 would confirm the continuation of the strong uptrend and potentially lead to a test of the major psychological resistance at 100.00. Conversely, in the bearish breakdown scenario, a break and close below the immediate support at 98.55 would represent the initial indication of weakening momentum and could catalyze a more substantial pullback. A more critical bearish development would occur with a break below the key support zone at 98.28, which would indicate the end of the current bullish impulse and likely prompt a correction toward the major support at 97.66. Should the 97.66 level fail to hold, the entire bullish trend would be at significant risk.

USDX Pivot Indicator

• Recent price activity indicates a period of consolidation following the establishment of a fresh peak. The index is presently moving laterally as it absorbs its recent advances. Such behavior represents typical and constructive action within a robust upward trend. The Stochastic Oscillator remains below extreme overbought levels, implying potential for further upside movement once this consolidation phase concludes.
• Bullish Breakout: A decisive break and close above the immediate resistance at 99.685 would validate the end of the consolidation period and signal the uptrend’s resumption. This breakthrough would pave the way for an advance toward 99.800 and possibly the significant 100.00 psychological threshold.
• Bearish Breakdown: A break and close below the immediate support at 99.435 (purple MA) would represent the initial indication of weakness, implying a more substantial pullback may be emerging. A more definitive bearish confirmation would occur with a breach below the structural support at 99.060. Such a development would violate the immediate higher-low pattern and likely prompt a test of the key dynamic support around 98.885 (black MA).

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