US Dollar Index faces steep decline as AUD/USD signals a strong reversal

DXY's four-month rally breaks down below 106.415, while AUD/USD eyes a bullish turn amid a weakened greenback.

US Dollar Index (DXY) pullback signals reversal as February decline deepens.

The US Dollar Index (DXY) extended its losses, falling below the 106.41 critical support on Monday, February 24, 2025. After starting the month at 109.530, the Index declined more than 3% in February, increasing the probability of a deeper correction. The four-month rally that began in October 2024 appears to be losing momentum, with a strong reversal price pattern emerging as the new trading week begins.

January 2025's trading session ended with indecision at 108.340, setting the stage for a potential trend shift. While bulls attempted to reclaim control in early February, bearish momentum intensified, leading to significant losses. The key support zone at 105.63 will be crucial—if breached, a deeper correction could follow. Conversely, a rebound above the 106.41 resistance is essential for bulls to regain traction.

Several macroeconomic factors have contributed to the dollar's decline:

• Uncertainty around US trade policies under the Trump administration, with conflicting signals on tariff strategies, has weighed on investor sentiment.

• US Treasury yields have softened, limiting the dollar's appeal as expectations grow for a potential shift in the Federal Reserve's stance later in 2025.

• Profit-taking by institutional traders following the DXY's prolonged rally has added selling pressure.

As we approach March trading, the price action around 105.63 support and 106.41 resistance will be key in determining the USD's next directional move.

US dollar Index(DXY) February 24 2025

AUD/USD reversal gains momentum as bulls eye 0.6490 target

After a three-month decline, the Australian Dollar (AUD/USD) shows strong signs of a trend reversal. Since falling from the 0.6898 resistance in October 2024, the pair has struggled to regain bullish momentum. However, February 2025 has provided a turning point, with price action confirming a monthly candle reversal to the upside.

The Aussie bounced off the 0.6107 support at the beginning of February, initiating a recovery phase. Key technical milestones include:

• Breaking above January's highs, reinforcing bullish strength.

• Testing the 0.6379 resistance—a crucial level that needs to hold for further upside.

• Targeting 0.6490 as the next major resistance, contingent on sustained momentum.

Should a pullback occur, January's highs at 0.6328 could provide critical support for the rally's continuation.

Fundamental factors supporting AUD/USD's reversal include:

• US Dollar weakness—DXY's ongoing correction has provided tailwinds for the Aussie.

• Reserve Bank of Australia's (RBA) rate cut—despite a 25bps reduction, the RBA signalled a cautious stance on further cuts, preventing excessive downside for AUD.

• Chinese economic stimulus measures—China's policies aimed at boosting domestic consumption and agricultural demand have strengthened confidence in Australia's export-driven economy.

With March trading activities set to shape the next phase of AUD/USD's recovery, a deeper USD correction would further boost the Aussie's path toward the 0.6490 target.

Australian dollar (AUD/USD) February 24 2025