US Dollar Short-term Outlook: USD Bulls Eye Resistance Ahead of NFP

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

US Dollar reverses off major resistance into December close- marks largest weekly decline since August
USD testing multi-month trend support- weekly opening-range breakout imminent
Resistance 106.55, 107.00/13 (key), 107.49- Support 106.10, 105.63/78 (key), 104.87-105.05

The US Dollar Index plunged nearly 2.3% off the yearly high with DXY rebounding off multi-month trend support into the December open. The weekly opening-range is set poised for an imminent breakout and while the broader outlook remains constructive, the immediate advance may be vulnerable here. Battles lines drawn on the DXY 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 USD Short-term Outlook, we noted that the DXY rally was extending into initial resistance targets and that, “losses should be limited to 104.87 IF price is heading for another breakout with a close above 106.37 needed to fuel the next leg of the advance.” The Dollar broke higher the following day with the index briefly registering an intraday high 108.07 before exhausting into the close of the month. The focus into the December open is on this recovery off support with the broader uptrend vulnerable 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 the index trading within the confines of a proposed descending pitchfork with the 25% parallel catching the lows last week. Note that the weekly opening-range is taking shape just below the 38.2% retracement of the recent of the decline at 106.55 with more significant resistance eyed at the 2023 high-day close (HDC) / 61.8% retracement at 107.00/13- look for a larger reaction there IF reached. Ultimately, a breach / close above the yearly HDC at 107.49 would be needed to mark uptrend resumption towards 108 and the 61.8% retracement of the 2022 decline at 108.97.

Initial support rests with the 2023 high-week close (HWC) at 106.10 and is backed by the monthly open / May HDC at 105.63/78- a break / close below this threshold would suggest a more significant high was registered last month / a larger correction is underway with the next major support zone seen at 104.87-105.05- a region defined by the July HWC, the February high, and the 38.2% retracement of the yearly range (area of interest for possible downside exhaustion / price inflection IF reached).

Bottom line: The US Dollar rebounded off multi-month uptrend support into the December open and the immediate focus is on a breakout of the weekly opening-range. The threat for a deeper correction remains while below 107.13. From a trading standpoint, losses would need to be limited to 105.63 for the September uptrend to remain viable with a close above 107.49 needed to mark resumption.

Keep in mind we are in the early throws of the December opening-range with US non-farm payrolls on tap Friday. Stay nimble into the release and watch the weekly close here for guidance. Review my latest US Dollar Weekly Forecast for a look at the longer-term DXY technical trade levels.

Key USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.