US Dollar Short-term Outlook: USD Breakdown Threat Builds as Weekly Range Crack

US Dollar Index Technical Outlook: USD Short-term Trade Levels

U.S. Dollar under pressure as Index breaks September uptrend- tested former support as resistance before turning sharply today
DXY attempting to break below the weekly opening-range today and risks further losses, rallies remain vulnerable while below channel resistance.
DXY Resistance 99.27/41, 99.60, 99.75 (key)- Support 98.68/80, 98.03, 97.71/81

The US Dollar is slipping into deeper correction territory, with DXY breaking below the September uptrend into the close of November. The index briefly retested former support as resistance before turning sharply lower today, and price is now attempting to push beneath the weekly opening-range. Adding pressure, the ADP employment report showed the largest decline since 2023, with a loss of more than 32K jobs in November — a print that further solidifies expectations for an interest rate cut from the Fed next week. The immediate focus is on whether initial support can steady price or if a larger breakdown takes hold into the December open. Battle lines drawn on the USD short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this US Dollar technical setup and more. Join live on Monday’s at 8:30am EST.

US Dollar Index Price Chart – USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Technical Outlook: In last month’s US Dollar Short-term Outlook we noted that a break below support in the DXY was, “threatening a deeper setback- be on the lookout for a possible exhaustion low in the days ahead. From a trading standpoint, losses would need to be limited to 98.68 IF this is a simple correction with a break above 100.35 needed to mark uptrend resumption.” The index registered an intraday low at 98.99 the following day before rebounding more than 1.4%. The rally failed again at key resistance into the close of the month with the subsequent pullback plunging more than 1.5% off the November high. A break below the September uptrend threatens a deeper correction here with the decline now approaching initial support and the focus is on possible inflection off this zone early in the month.

US Dollar Index Price Chart – USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Notes: A closer look at USD price action shows DXY breaking below the ascending pitchfork extending off the late-September low with the index testing former support as resistance before turning sharply lower. Price is attempting to break below the weekly opening-range here with initial support now in view at 98.68/80- a region defined by the August high-day close (HDC), the May low, and the 38.2% retracement of the advance off the yearly low. Note that channel support converges on this threshold over the next few days and a break / close below this slope would threaten a much steeper decline. Subsequent support objectives eyed at the late-October swing low at 98.03 and the 2018 high / 61.8% retracement at 97.71/81.

Initial resistance is now eyed back at the November low-day close (LDC) and the 23.6% retracement at 99.27/41 and is backed by the 200-day moving average at 99.60. Ultimately, a breach / close above the November open at 99.75 would be needed to suggest a more significant low is in place and a larger reversal is underway. Key resistance remain unchanged at the 2024 low / low close at 100.15/35.

Bottom line: DXY is attempting to break the weekly opening-range today and keeps the near-term outlook tilted to the downside while within this channel. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a drop towards 98.68- rallies should be limited to 99.40 IF price is heading lower on this stretch.

Keep in mind we get the release of the September Core Personal Consumption Expenditures (PCE) on Friday. Stay nimble into the release and watch the weekly close for guidance here. Review my latest US Dollar Weekly Forecast for a closer look at the longer-term DXY technical trade levels.

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Written by Michael Boutros, Senior Technical Strategist

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