The U.S. dollar is showing early signs of short-term strength, even though the broader economic environment remains weak. Its Starting of December 2025 and the recent data, including Monday’s ISM manufacturing PMI, again highlighted deeper contraction in new orders and employment — signals that normally point toward slower growth. On top of that, rumor is rising that President Trump may hand the role to Kevin Hassett as the next Fed chair, a move widely viewed as dovish and supportive of lower interest rates. Under normal situations, these factors would push the dollar lower, but current market behaviour is showing completely opposite.
This inconsistency between price action and the macro backdrop is becoming increasingly clear. Economic indicators suggest softer policy ahead, yet key USD charts continue to hold strong levels and are generating bullish setups. This shows traders are pricing in near-term dollar strength despite weak fundamentals.
DXY: Early Signs of a Possible Rebound
The bearish break on the DXY daily chart is already losing momentum. The index bounced quickly after touching the 50-day moving average, forming a bullish pin-bar candle — often an early sign of upside potential.
The area just above 99.50, which acted as former trend support, becomes an important zone to watch. If the price pushes above this level, buyers may step in, while the 200-day moving average works as the first major test for further gains. A clean break above the 200DMA may open the way toward 100.25, a zone where previous rallies struggled.
If the bounce fails to hold, short setups remain possible beneath the former uptrend. The 50-day MA, 99.00, 98.60, and 98.08 will act as the next support areas. Overall, DXY indicators such as RSI and MACD remain neutral, making price action the primary guide.
EUR/USD: Sharp Rejection from Resistance
EUR/USD is reflecting the opposite picture of the DXY. A shooting-star candle appeared on the daily chart after a failed attempt to break above the 50DMA. The sharp rejection from the 1.1650 resistance zone directly contributed to the dollar’s strength on Monday.
Traders looking for bearish setups may consider entries below the 50DMA, with 1.1607, 1.1578, and 1.1550 appearing as potential targets.
If the pair climbs back above the 50DMA, a bullish move toward 1.1650 may return. Momentum indicators are neutral here as well, so relying on real-time price structure is more suitable.
USD/CHF: Bullish Technical Signals Hold Firm
USD/CHF generated another supportive signal for the dollar. The pair printed a hammer candle after failing to break the 0.8000 support and the 50DMA. With RSI and MACD slightly favoring upward movement, the bias remains tilted toward strength.
If the price stays above 0.8037, traders can look for long setups. Short-term targets include 0.8071 and 0.8100.
Key Data to Watch Ahead
Several known releases are scheduled in the coming days, although their market impact may remain limited unless the data surprises:
- Eurozone inflation & unemployment (Tuesday) – These rarely create major moves now due to the accuracy of early estimates.
- Swiss inflation data (Wednesday) – More relevant for USD/CHF due to Switzerland’s deflation sensitivity.
- S. ADP employment data & ISM services PMI (Wednesday) – These will likely matter the most for short-term USD direction.