US Dollar Technical Forecast: USD Rebound Rejected at Resistance

US Dollar Index Technical Forecast: USD Weekly Trade Levels (DXY)

US Dollar July breakout fails to breach resistance after rallying more than 4% off yearly low
NFP spark USD reversal into August open- DXY plunges nearly 2.3% off multi-month high
USD range in focus just above trend support- CPI on tap
DXY Resistance 99.58/84 (key), 100.98, 101.65- Support 96.94/98, 96.38 (key), 94.65/98

The US Dollar is coming off a failed attempt to mount a breakout, with DXY turning lower after testing initial resistance into the August open. The rejection follows a multi-week rebound off long-term support, and the focus is now on a possible range break for guidance. While broader downside risk remains intact, the yearly low continues to mark a critical pivot in the days ahead. Battle lines drawn on the DXY weekly technical charts.

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

US Dollar Price Chart – USD Weekly (DXY)

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

Technical Outlook: In last month’s US Dollar Technical Forecast we noted that the short-bias was vulnerable as DXY was, “approaching downtrend support near the yearly lows- risk for price inflection on test of the median-line.” DXY tested the median-line later that week before rebounding into the close of the month. The rally failed last week at confluent resistance around 99.58/84- a region defined by the 2023 swing low, the April low-week close (LWC), the 2019 high and the 61.8% retracement of the May decline. A breach / close above this key zone is needed to suggest a more significant low is in place / a larger reversal is underway. Subsequent resistance objectives eyed at the May high-week close (HWC) at 100.98 and the 38.2% retracement of the early range at 101.65- look for a larger reaction there IF reached.

Weekly support rests with the 2021 swing high / 2025 LWC at 96.94/98 and is backed closely by the yearly low at 96.38- ultimately, a break / close below the medina-line is needed to mark resumption of the broader multi-year downtrend. Subsequent support objectives eyed at the March 2020 low / 100% extension of the 2022 decline at 94.65/98.

Bottom line: The U.S. Dollar rebounded off downtrend support on building momentum divergence last month with the rally failing in initial resistance into the August open. From a trading standpoint, the focus is on a breakout of the 96.94-99.84 range for guidance here- ultimately, rallies should be limited to 101.65 IF USD is heading for a break lower with a close below 96.38 needed to mark downtrend resumption.

Keep in mind we get the release of key U.S. inflation data next week with the Consumer Price Index (CPI) on tap Tuesday. Stay nimble into the release and watch the weekly closes for guidance. Review my latest US Dollar Short-term Outlook for a closer look at the near-term DXY technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

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