Dollar is finishing a difficult year with a 'golden cross' - suggesting the worst might be over

By Vivien Lou Chen The chart pattern has been a reliably bullish indicator for the buck over the years, a BofA strategist notes The U.S. dollar might be in for a bit of a reprieve in early 2026. The U.S. dollar has had a rough go of it in 2025 - but one recent development indicates that the beaten-down buck could be due for a bit of a reprieve in early 2026. Late last week, the ICE U.S. Dollar Index DXY, a measure of the greenback's value against a basket of six rival currencies, saw its 50-day simple moving average cross above its 200-day moving average, according to Paul Ciana, a technical strategist at BofA Global Research. This is a bullish technical signal known as a "golden cross." The encouraging development arrived at the tail end of what has been an otherwise difficult year for the buck. The dollar index has fallen by about 9% since the start of 2025 and was trading only slightly above its lowest levels of the year on Monday, with the index off by 0.3% at 98.30. The latest golden cross for the dollar marked the 39th such signal since 1970, BofA's Ciana noted. For investors looking for signs that the dollar might be due to rebound, the signal suggests that the U.S. currency could strengthen during the months ahead. Generally speaking, "a golden-cross signal has been bullish for the dollar," Ciana said in written commentary. Once a golden cross has occurred, the dollar tends to be higher between 20 and 60 trading sessions later, he said. The dollar has weakened against rivals like the euro (EURUSD) this year, and a variety of reasons have contributed to its decline. After starting the year near its strongest level in years, investors turned on the buck based on the assumption that President Trump's trade policies could threaten the U.S.'s global standing and hurt its brand. Expectations that the Federal Reserve could continue to lower U.S. interest rates, while rates in other major economies hold steady or climb, has also contributed to the greenback's struggles. Interest rates often lead moves in the global currency market, as investors tend to gravitate toward wherever their capital can earn the highest returns. -Vivien Lou Chen This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 12-22-25 1434ET