In this video: In this urgent market update, Gareth Soloway (Chief Market Strategist at Verified Investing) breaks down why the U.S. Dollar (DXY) is on the verge of a historic breakdown. After a massive 2-point drop in just five trading days, the dollar is testing a critical support line dating back to the 2008 lows.
Soloway warns that the "fabric of trust" in the U.S. financial system is eroding due to escalating geopolitical tensions, specifically the 100% tariff threats against Canada over their China trade deal and the push for the Greenland acquisition causing friction with European allies. Video by Gareth Soloway.
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As of early January 2026, the U.S. Dollar Index (DXY) is testing a critical, long-term support level near 98, a threshold that has shaped global markets for over a decade. This level is considered a "line in the sand" for the dollar's multi-year trend.
Breakdown of the current situation
--The Critical Level: The 98 level represents a 14-year line of defense, marking a crucial inflection point after months of downward pressure on the dollar.
--What Happens if Support Fails: If the dollar fails to hold the 98 level on a multi-week closing basis, technical analysts suggest a "regime-level shift" where the next meaningful support may not appear until the 94–92 range.
--Market Implications: A failure to hold this support could trigger significant shifts across asset classes, including a potential boost for commodities, precious metals, and equities.
--Current Context: Despite this, the U.S. dollar has been attempting to hold its ground, in part due to recent, better-than-expected inflation data (CPI) that has influenced Federal Reserve rate cut expectations.
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