Dollar Index Analysis: Wedge + Powell Outlook – June 25, 2025

📉 Technical Outlook: Bearish Rising Wedge + Liquidity Sweep Setup


DXY The Dollar Index (DXY) is currently trading within a rising wedge pattern, typically a bearish structure. We're anticipating a fake breakdown, potential sweep of the key demand zone, followed by a reversal move targeting key highs.

🔍 Key Technical Zones
📥 Demand Zone (Buy Area):
🔵 97.50 – 97.20 = Institutional accumulation + unfilled orders

🚫 Invalidation Level (Stop-Loss):
❌ 96.70 = Clean break below confirms full bearish continuation

🎯 Target Projections (Upside Levels):

• TP1: 99.00
  
• TP2: 100.00
  
• TP3: 101.04 (HTF swing high liquidity cleanout)
  

🧠 Summary Setup:

• Downtrend
  
• Rising wedge formation
  
• Sweep of 97.20 possible
  
• Watch for fakeout & reversal play toward 101.04
  

🏛️ Fundamental Analysis – Powell’s Testimony Insights
Fed Chair Powell highlighted the following during his recent testimony:

🔄 “We’re not there yet on inflation” — Core services remain sticky

🛑 No immediate rate cuts — Growth is slowing but not crashing

🕰 Rate cuts likely postponed to Q4 2025

🔐 “Real rates are restrictive enough” = No more hikes expected

💡 Implication for DXY:
✅ Short-term bullish bias as higher U.S. yields remain attractive if rate cuts are delayed.
🌍 Macro Context Snapshot (as of June 25, 2025)
🇺🇸 US Disinflation: CPI & PCE easing, but not collapsing
🇪🇺 ECB Cut in June: Euro may weaken further
🇯🇵 BOJ Policy Unclear: USD/JPY likely volatile
🌐 Global Risk Appetite High: Volatility may return with geopolitical events

🔥 Watch This: Trade Tariff Narrative Heating Up
🚨 New U.S. Tariff Signals on Chinese tech and EU autos are resurfacing. This could:

Push inflation risk higher

Delay Fed’s easing timeline

Add support to USD short term as markets price in geopolitical tension and uncertainty

📌 Trading Strategy Recap:

• Monitor wedge support near 97.20
  
• Look for fakeout/sweep and bullish reversal
  
• Target 99–101 zone on rebound
  
• Stay alert to Powell/Fed rhetoric + tariff news
  

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