DXY Eyes $111 as Final Wave Targets Major Breakout

• DXY is forming a five-wave pattern that signals a move toward $111 before a correction begins.
• Fibonacci levels show resistance at $108 and $110 which could slow the rally before reaching its final peak.
• A drop below $105 may cancel the bullish setup and lead to an early reversal instead of the expected breakout .

The U.S. Dollar Index (DXY) is moving within a structured Elliott Wave pattern, with analyst BigMike7335 predicting a final push toward $111. As of now, DXY hovers at 106.722, with a daily range between 106.615 and 106.738, signaling a moment of indecision. A key support zone lies at 105.112, aligning with the projected Wave 4 correction before an anticipated fifth-wave extension. The chart also highlights a potential pullback to $105, followed by a rebound that could complete a larger wave structure. 

Technical Setup and Projections

The current formation shows an ongoing five-wave move within a rising channel, reinforcing bullish momentum. Fibonacci extensions indicate key resistance at 108.276 and 110.685, marking potential targets if DXY sustains its upward trajectory. A 1.618 Fib extension aligns with 105.866, hinting at a corrective wave before a continued push higher. If the 3.618 Fib level at 110.685 holds, the final fifth wave could see exhaustion near $111 before a larger corrective decline.

Momentum indicators suggest mixed signals, with the RSI near overbought levels, implying caution for late buyers. The stochastic oscillator is approaching a reversal point, which could trigger short-term selling pressure. Moving averages, particularly the 50-day and 200-day EMAs, act as dynamic support levels, ensuring structural integrity within the bullish framework.

Potential Risks and Market Reaction

Then the bullish structure is intact, but failure to hold below 105.112 may invalidate the fifth-wave extension scenario. A drop below this level would suggest early completion of Wave C and lead to a more significant decline. However, macro-factors, such as inflation data and monetary policy changes at the Federal Reserve , are being monitored by the markets for their potential effects on the dollar’s course.

DXY traders remain divided on the eve, with some forecasting a last extension of the upside leg while others anticipate an early reversal. If the Elliott Wave count remains intact, DXY is on course for a fundamental directional move toward $111 within the next few weeks, satisfying the extended fifth-wave target before the significant corrective phase begins.