A Single Trendline Is Dividing Forecasters as Dollar Sits Near 18-Month High

The dollar index (DXY) was trading near 102.2 early Monday, not far from the 18-month high it touched the previous week. With key US inflation figures approaching and the Middle East conflict escalating, market participants have remained cautious.

Forecasters are divided: the question is whether the uptrend now hits a long-term trendline or keeps going for years.

Dollar Rally Divides Chart Watchers Over a Single Trendline

The climb comes after a September that saw the gauge add close to 2%. In daily trading, the DXY moved from roughly 98.8 in early September to above 102. The push also carried the index past its July highs near 101.6.

Macro strategist Gert van Lagen, for one, sees the rally losing steam at a trendline the DXY broke through in the prior year.

#DXY is all set for a sharp rejection. 📉 Finally a bearish retest with macro implications, i.e. a weekly close at the trendline through the 2023 and 2024 weekly closes.

— Gert van Lagen (@GertvanLagen) October 10, 2026

Sweep, who co-founded GlydeGG, likewise called the price action a bearish retest. In his view, a rejection is coming next, and that would be positive for digital assets and equities.

A different analyst, by contrast, contended the DXY is still inside an 18-year bull run. That uptrend, on his tally, started from a record low of 70.698 on March 17, 2008. He also said the advance has years left, with the index nearing a quarterly golden cross.

Trader Alejandro is likewise looking for USD strength, a move with clear knock-on effects for digital assets.

“I believe the dollar is setting up for another major move higher. A stronger dollar tightens financial conditions and tends to put pressure on risk assets, especially crypto and altcoins,” he said.

CPI Wednesday Could Shape the Fed's October Decision

Chart analysis aside, the focus now shifts to Wednesday's consumer price index (CPI) release. Thursday brings producer prices and retail sales, before the Federal Reserve's rate decision scheduled for October 28.

On September 16, the Fed lifted rates to between 3.75% and 4.00%. That marked the central bank's first increase since July 2023.

Since then, traders have trimmed expectations for another increase. According to CME FedWatch data at press time, the probability of staying put this month was 82.8%. One month prior, a hold was seen at 51% and a hike at 42.5%.

Elsewhere, data from early October pointed to another drop in consumer sentiment. The University of Michigan's preliminary October reading put the consumer sentiment index at 46.3, the lowest in five months. September's figure was 48.1, with households squeezed by living costs related to the conflict.

Analysts at Barclays reckon the dollar's run could stall, leaving room for a short-term pullback. Their reasoning cites bond market volatility, which has tightened borrowing conditions globally. That pressure, they said, could push the Fed toward more reassuring remarks before October 28, particularly if CPI lands on the soft side.

A mild CPI print is part of the reasoning behind Barclays' call for a pullback. That puts Wednesday's report front and center as the next test for bulls and bears on the trendline.

Why Crypto Is Watching Which Way the Dollar Breaks

Bitcoin (BTC) and the dollar have tended to move in opposite directions, meaning a stronger greenback usually presses on BTC's price. September broke that pattern: BTC added 6.14% while the dollar index climbed close to 2%.

So far, October has been difficult for digital assets. Total crypto market capitalization has slipped 1.4% this month, with the drop attributed to higher yields, an oil spike and selling by funds.

Should the dollar be turned back at the trendline, that inverse relationship would remove one headwind for Bitcoin. If it breaks higher instead, the question becomes whether September's resilience can hold up with the dollar even stronger.