Dollar Ends Challenging 2025 with Bullish “Golden Cross” Signal, Hinting at Potential Rebound
By Vivien Lou Chen, MarketWatch | Dec. 22, 2025
The U.S. dollar, after a turbulent year marked by a steady decline, may be poised for a turnaround as it closes out 2025. Market watchers point to a technical chart pattern known as a “golden cross” as a bullish indicator that the worst of the dollar’s struggles could be behind it.
What Is the Golden Cross?
Last week, the ICE U.S. Dollar Index (DXY)—which tracks the greenback’s value against a basket of six major currencies—saw its 50-day simple moving average rise above its 200-day moving average. This crossover is referred to as a golden cross, a widely regarded technical signal among traders and analysts signaling potential strength ahead.
Paul Ciana, a technical strategist at Bank of America Global Research, highlighted this development, noting it is the 39th golden cross since 1970 for the dollar. Historically, this pattern has often been followed by a rise in the dollar’s value in the subsequent one to three months. “Once a golden cross has occurred, the dollar tends to be higher between 20 and 60 trading sessions later,” Ciana said in his analysis.
A Difficult Year for the Dollar
The dollar faced significant headwinds throughout 2025. Since the beginning of the year, the dollar index has dropped approximately 9%, dipping close to its lowest levels of the year. On Monday, it was down 0.3%, trading near 98.30. Multiple factors fueled the dollar’s decline. Early in the year, the currency was near a multi-year high, but concerns about the impact of former President Trump’s trade policies weighed heavily on market sentiment. Investors feared that these policies might undermine the U.S.’s standing on the global stage and erode confidence in the dollar.
Additionally, expectations that the Federal Reserve might reduce U.S. interest rates contrasted with the outlook for other major economies, where interest rates were either steady or rising. Since interest rate differentials are a key driver of currency values—investors typically favor currencies from countries offering higher returns—the relatively lower U.S. rates contributed to dollar weakness.
The euro, in particular, benefited from these dynamics, with the EUR/USD pair gaining ground against the dollar during the year.
Looking Ahead
The emergence of the golden cross suggests that the dollar may gain renewed momentum as 2026 begins. While technical signals are not guarantees, this pattern has been a reliable indicator of dollar strength historically.
Investors and currency strategists will be closely monitoring Federal Reserve policies, geopolitical developments, and global economic indicators to assess whether this optimistic technical sign translates into tangible gains for the greenback.
About the Author:
Vivien Lou Chen is a Markets Reporter for MarketWatch. She covers investing, personal finance, and economic news. Follow her on Twitter @vivienlouchen.
Source: MarketWatch
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