DXY & EUR/USD Technical Outlook: Dollar Holds Above 101, Euro at Risk?

The US dollar continues to hold above the 101 mark, primarily supported by the new Federal Reserve leadership and a higher-for-longer monetary policy outlook amid persistent inflation concerns. Despite the recent pullback in the US Dollar Index (DXY), the broader trend remains constructive, keeping pressure on the euro below 1.1430.

The Dollar's 100.60–101 Zone: A Defining Bullish Barrier

The importance of this price zone dates back to 2023, when buyers repeatedly stepped in following extended dollar declines, while sellers used the same area to reduce long dollar positions after strong rallies.

As a result, the 100.60–101 region has evolved into one of the most significant long-term support and resistance zones on the chart, separating bullish and bearish market sentiment.

DXY Price Outlook: Monthly Time Frame (Log Scale)

Source: TradingView

On the monthly chart, the DXY continues attempting to maintain momentum above this key zone while simultaneously testing the midpoint of the declining channel extending from the 2022 high through 2026.

The current technical confluence includes:

• Midpoint of the 2022–2026 declining channel.
• Former 2023–2026 support now acting as resistance.
• Monthly momentum indicators testing the neutral 50 level from below.

This creates a highly significant technical inflection point.

A sustained breakout above 101.70–102.00 would reinforce the bullish outlook and expose the following upside targets:

• 102.80
• 104.50
• 107.00 (upper boundary of the long-term channel)

Conversely, rejection from this resistance zone, followed by a move below 100.60, 100.20, and ultimately 99.30, would reaffirm a broader bearish consolidation within the lower boundary of the multi-month channel that has been respected since the 2008 lows.

These levels also coincide with the next major Fibonacci retracement zones of the 2025–2026 decline, before a larger corrective decline in the US dollar could become more likely.

What Does This Mean for the Markets?

Markets are approaching one of the most sensitive technical inflection points of the year.

The current battle around the 100.60–102 region will likely determine whether we see:

• A sustained bullish reversal in the US dollar, weighing further on currencies and precious metals for another leg lower this year
• Or another leg lower in the dollar helping longer-term bullish cycles across major currency and metals resume.

EURUSD Price Outlook: Monthly Time Frame – Log Scale

Source: Trading view

Bearish Continuation Risks

A sustained break below 1.1280—the former resistance-turned-support that has held between 2023 and 2026—combined with a monthly RSI break below the neutral 50 level, would expose the upper boundary of the long-term descending channel near 1.10.

That zone could present another long-term accumulation opportunity for EUR/USD.

However, failure to hold above this region would significantly increase the probability of a renewed long-term bearish trend.

Bullish Rebound Scenario

Holding above 1.1470, which represents the 27.2% Fibonacci retracement of the April 17–June 24 decline, would expose the following upside targets:

• 1.1530 (38.2% Fibonacci retracement)
• 1.1590 (50%)
• 1.1650 (61.8%) — high-probability pullback zone

A sustained breakout above these levels would shift focus toward the 1.1730–1.1850 resistance zone.

This remains the defining technical area separating the long-term bullish and bearish outlook and could eventually open the path toward levels above 1.20.

Markets Await the Next Catalyst

The US dollar remains the dominant macro theme across financial markets.

Attention now turns to Wednesday's FOMC minutes, which will provide further insight into policymakers' thinking following the recent moderation in hawkish rhetoric after weaker-than-expected US labour market data.

Whether the minutes reinforce the higher-for-longer narrative or support a more balanced policy outlook will likely determine whether the dollar can sustain its position above the critical 101 level and continue pressuring EUR/USD in the weeks ahead.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves