DXY call - Feb 2026
Can DXY Reach 100 Soon? A Liquidity-Based Case for the Dollar
As the title says: we are bullish on DXY. The premise is that President Trump would want a higher dollar heading into the midterm election — a stronger dollar helps offset tariff-driven inflation, and lets him point to a "strong and mighty" currency during election season. But the fundamental premise is only half the case. The other half is algorithmic: a specific liquidity pattern on the DXY chart itself, and a divergence between DXY and EURUSD that shouldn't exist if both were trading on the same information.
01 The Setup: A Liquidity Purge Below the Q3 Low
Splitting the DXY daily chart into quarters, Q3 2025 set a low near 96.3 and Q4 2025 rallied to a high near 100.5. Heading into Q1 2026, price broke below that Q3 low — and then rejected hard, retracing strongly back into the range. That's what we call a liquidity purge: price is moved aggressively through an obvious level to run the stops of market participants who are already long with protective stops sitting just below it. It also flips sentiment bearish on the dollar, pulling in fresh shorts right before the move reverses. In algorithmic terms, price travels from one side's liquidity to the opposite side's. Here, the sell-side liquidity below the Q3 low has already been taken — which, if the pattern holds, points next toward the buy-side liquidity sitting at the Q4 high.
02 The Case: A Divergence Between DXY and EURUSD
DXY and EURUSD normally move as near-mirror images of each other. But on the weekly chart, DXY made a higher low while EURUSD made a higher high over the same stretch — both instruments looking constructive at once, which shouldn't happen if they're pricing the same information. That's usually a sign of manipulation by market makers rather than a genuine trend change in either. We've flagged this divergence in previous posts, and we'll maintain our bullish-dollar bias until it disappears from the charts.
03 The Trade: Long Dollar, Short EURUSD's Sell Zone
If the dollar is headed higher, EURUSD is headed lower — so the trade is to look for shorts in EURUSD's sell zone, roughly 1.185–1.19, sitting just above a gap in price left by an earlier sharp move. The bullish-dollar / bearish-euro bias is invalidated if EURUSD closes above the zone just overhead, roughly 1.195–1.20. Building a case on price action that's currently confirming the premise is one thing; knowing in advance what would prove it wrong is the other half of the discipline. We accept that we can't always be right, which is why risk management sits underneath every trade idea here, not just this one.
"So if we are bullish on DXY, we are bearish on EURUSD. We will accept that we are wrong if price goes above the invalidation zone. We accept the fact that we can't always be right, and so it is important that we use risk management on our trade ideas."
04 Verdict: How It Played Out
We checked both halves of this call — long dollar, short euro — against public market data.
| Date | Event | DXY | EURUSD |
|---|---|---|---|
| Feb 6, 2026 | Two days before call | 97.63 | 1.1778 |
| Feb 10, 2026 | EURUSD's high — inside the sell zone, below invalidation | — | 1.1904 |
| Jul 27, 2026 | DXY's high — through the Q4 target | 101.51 | — |
| Jul 28, 2026 | EURUSD's low | — | 1.1369 |
| Sep 4, 2026 | Most recent close | 99.16 | 1.1621 |
DXY change, call to peak: +3.98 points (+4.1%). EURUSD change, call to low: −0.0409 (−3.5%).
Confirmed on both legs
Both sides of this call landed. DXY closed at 97.63 two days before publication; by July 27, 2026 it closed at 101.51 — not just through the Q4 2025 high (~100.5) this call targeted, but through the psychological 100 level the headline asked about directly. EURUSD, the short leg, topped at 1.1904 on February 10 — two days after the call, and inside the 1.185–1.19 sell zone flagged, without ever closing above the ~1.195–1.20 invalidation level. It then declined to a low of 1.1369 on July 28 — one day after DXY's peak, an almost mirror-image turn on both instruments in the same week.
Both have since given back some of the move — DXY to 99.16 and EURUSD back to 1.1621 by September 4 — but that's normal mean reversion after a large move, not an invalidation of either leg. The dollar never closed back below its pre-call level, and EURUSD never closed above the level that would have proven the bearish-euro case wrong.
