As the US Dollar Index Approaches Key Support Levels, Here’s What a Potential Dollar Decline Might Signal for Financial Markets

Critical Juncture for the U.S. Dollar Index

For over ten years, a single trendline has quietly influenced the direction of global markets. This key level, found near 98 on the U.S. Dollar Index (DXY), is once again being challenged as the dollar approaches this significant threshold.

Potential Turning Point Identified

During a recent Market on Close livestream, Senior Market Strategist John Rowland, CMT, highlighted this technical test as a pivotal moment. While the dollar hasn’t breached this level yet, the outcome could have far-reaching effects across various markets, including precious metals, stocks, commodities, and even cryptocurrencies.

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The Importance of the 98 Level on DXY

Since 2011–2012, the dollar index has consistently found support along a crucial trendline, marking nearly 14 years where buyers have stepped in at this zone. The chart below illustrates this enduring channel.

Historically, each time the index has tested this support, one of two outcomes has occurred:

• The dollar stabilizes at this level; or
• A significant macroeconomic shift unfolds if the support fails

As of early January 2026, DXY has returned to this critical area, hovering just above 98 after a period of downward pressure.

John Rowland emphasized that if the dollar cannot maintain this level on a multi-week closing basis, the next notable support may not appear until the 94–92 range.

Such a move would represent a major shift in the market landscape.

Metals React First to Dollar Weakness

Markets often anticipate changes before the underlying stories become clear. At present, precious metals seem to be responding to emerging signals.

Gold started 2026 near record highs, and silver has surged even more impressively—patterns that typically coincide with currency instability and waning faith in fiat money.

There’s also a striking divergence: despite heightened geopolitical tensions that would usually boost the dollar as a safe haven, the currency has not managed a sustained rally.

This divergence is significant. When the dollar fails to strengthen during uncertain times, it often indicates that investors are shifting away from currency holdings and into tangible assets.

Broader Economic Pressures on the Dollar

Beyond technical analysis, several macroeconomic factors are contributing to this test of support. These include increased competition from other currencies, such as the Japanese yen.

Expectations around interest rates have also changed. Futures markets are now anticipating a pause or even a potential rate cut from the Federal Reserve in early 2026, diminishing the yield advantage that previously supported the dollar.

Meanwhile, central banks worldwide continue to diversify. Data from late 2025 shows ongoing accumulation of gold reserves and a reduction in holdings of U.S. Treasuries. While this doesn’t spell an immediate collapse for the dollar, it does gradually weaken long-term demand.

Market breakdowns rarely result from a single cause—they occur when technical and fundamental factors align.

Who Stands to Gain if the Dollar Breaks?

Historically, a decisive drop below long-term dollar support has benefited assets priced in dollars. These include:

• Precious metals: Gold and silver are typically the first to react
• Commodity producers: Weaker dollar improves their pricing power
• Multinational stocks: Foreign earnings become more valuable
• Risk assets in general: Looser liquidity conditions often follow

This is why John Rowland views the current setup as positive for metals and supportive for a broad range of assets, even though it would be negative for the dollar itself.

Assets and Symbols to Watch

If you’re following this trend on Barchart, here are some of the most closely monitored assets linked to dollar weakness:

Currency & FX

• DXY – U.S. Dollar Index
• UUP – Dollar Bullish ETF
• FXE / FXY – Euro & Yen exposure

Precious Metals

• GLD – Gold ETF
• SLV – Silver ETF
• PSLV – Physical silver trust

Mining Stocks

• GDX / GDXJ – Gold miners / junior miners
• SIL / SILJ – Silver miners / junior silver miners
• XME – Metals & mining ETF

You don’t have to trade all these instruments, but observing their movements relative to DXY can offer early insights into whether a dollar breakdown is gaining momentum.

The Dollar’s Defining Moment

At present, the market has not experienced a definitive break. However, major shifts rarely come with clear warnings.

The dollar is currently resting on a support level that has held for 14 years. If this level remains intact, metals may consolidate. If it fails, the coming months could look very different from recent years.

This analysis serves not as a forecast, but as a guide—because when a long-standing level finally gives way, the resulting move is often anything but quiet.

Watch a Brief Analysis of the Dollar Index:

👉 Stream the full episode of Market on Close

👉 Use Barchart’s tools to track metals and mining stocks for confirmation signals