US Dollar Forecast: DXY Eyes Bullish MA Crossover as Soft CPI Fuels Rebound

Buyers Press the Rebound as a Bullish Crossover Comes Into View

The U.S. Dollar Index is higher at mid-session as buyers extend a three-day short-covering rally that began after the December 16 low at 97.869 held inside the 98.307–97.814 support zone. The move through the short-term 50% level at 98.591 fueled a push to 98.749, and that breakout is now central to near-term direction.

At 18:13 GMT, DXY is trading 98.597, up 0.179 or +0.18%.

A key feature of today’s trade is the impending crossover between the 50-day and 200-day moving averages near 99.200 and 99.212. Traders are watching this closely because a short-term average rising above a longer-term one is often treated as a bullish signal, especially when it develops after an extended pullback.

Yields Stay Firm as Softer CPI Fails to Knock the Dollar Off Its Rebound

Treasury yields are ticking higher even after the softer CPI print, and that is helping the dollar hold its rebound. With the 10-year yield up to 4.147% and the 2-year at 3.485%, investors are not rushing to price in aggressive early-2026 easing. Rising yields matter because they lift the return profile of U.S. assets, which tends to support the dollar.

The November CPI surprise — headline at 2.7% and core at 2.6% — pushed traders to increase the probability of a March rate cut to 56.8%. But the shift has been measured, partly because the data was affected by shutdown-related delays. As a result, rate expectations are steady enough to keep the dollar from giving back recent gains.

Europe Can’t Find Its Footing — and Cross-Flows Lean Back Toward the Dollar

The euro is stuck near $1.1717 after Christine Lagarde resisted pressure from hawkish members and offered no forward guidance. That leaves EUR/USD heavy, which mechanically helps the dollar index.

Sterling’s round-trip after the BOE cut to 3.75% shows a market reluctant to price deeper easing. With both currencies lacking momentum, cross-flows tilt toward the dollar and reinforce the current bounce.

Cautious Risk Tone Keeps Sellers on the Sidelines as Yields Firm Up

Risk appetite is cautious. Traders like the cooler inflation data but remain unsure how much of it reflects genuine easing versus collection disruptions. With long-end and front-end yields edging higher, dollar sellers have little incentive to press the downside.

Breakout Holds as a Bullish Crossover Cluster Draws Traders In

The breakout over 98.591 is the key technical feature. Holding above that pivot keeps support intact and opens room toward the longer-term pivot at 99.132. The 50-day and 200-day moving averages at 99.200 and 99.212 form the next meaningful cluster, and the looming bullish crossover is gaining attention. Such crossovers often attract systematic funds and can amplify volatility when price is already recovering.

Bullish Bias Building Above 98.591 Pivot

Short-term bias stays bullish while the index holds above 98.591. Firm yields, soft European currencies, and the approaching moving-average crossover all point to a market comfortable probing the 99 area.

More Information in our Economic Calendar.