The US dollar remains weak, but a key level could change everything as we head into this week’s Fed rate decision.
Watch today’s video to see how I’m trading EURUSD and DXY this week.
EURUSD has held up well following its early March rally, which sent the euro 540 pips higher in just seven trading days.
Last week closed near the November 2022 trend line at 1.0880, and buyers are still holding their ground.
However, late EURUSD longs could run into trouble given the lack of a pullback this month.
That’s especially true with Wednesday’s Fed rate decision and press conference on the horizon.
From a technical standpoint, the absence of a correction since March 3rd suggests a build-up of sell-side liquidity, particularly below levels like 1.0777.
While there’s no guarantee of a shakeout this week, chasing EURUSD at these levels isn’t ideal.
The DXY also finished last week above key support in the 103.00-103.50 region.
If price action in 2025 continues to mirror the September-November 2022 movement, a short squeeze into 105.00 resistance could be on the table.
I remain bearish on the US dollar as long as DXY 105.00 holds as resistance on the high time frames.
That said, a short squeeze in the US dollar is a real possibility while DXY 103.00 support remains intact.
