US Dollar Short-term Outlook: USD Bulls Charge Monthly Highs Post-Fed
The US Dollar is surging toward the monthly highs, with breakout potential building in the wake of the Fed decision. Battle lines drawn on the DXY technical charts.
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US Dollar Index Technical Outlook: USD Short-term Trade Levels
- U.S. Dollar surged toward the monthly highs in the wake of the Fed rate-cut
- President Trump & Xi reach tentative agreement to avert tariff escalation
- USD breakout potential- focus on whether bulls can sustain traction into the weekly / monthly close
- DXY Resistance 99.39/40, 99.85, 100.16/35- Support 98.56/68 (key), 97.71/82, 97.01
The US Dollar extended its advance following this week’s Federal Reserve decision, with USD price action surging toward the monthly highs. The post-Fed breakout keeps the near-term focus on a possible resumption of the September advance, with the index now testing resistance ahead of the U.S. open. Broader sentiment has also improved after Presidents Trump and Xi reached a tentative trade agreement, easing tensions and lending further support to USD bulls. Battle lines drawn on the USD short-term technical charts.
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US Dollar Index Price Chart – USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Technical Outlook: In last week’s US Dollar Short-term Outlook we noted that the DXY was, “threatening a larger recovery after last month’s breakout, and the near-term risk is higher while above the weekly low. From a trading standpoint, losses should be limited to 98.39 If price is heading higher on this stretch with a close above 99.40 needed to fuel the next leg of the advance.” The index briefly registered an intraday low at 98.56 before rebounding sharply on the heels of the Federal Reserve yesterday. The advance has extended more than 0.8% off the weekly low with DXY now approaching resistance near the monthly highs. The breakout potential rises here with the outlook weighted to the topside while above the weekly low.
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 continuing to trade within the confines of an ascending pitchfork extending off the yearly low with the post-Fed rally now approaching the median-line. The immediate focus is on a reaction into resistance at the October high-day close (HDC) / 78.6% retracement of the August decline at 99.40- a breach / daily close above this level is needed to fuel the next leg of the advance. Subsequent resistance objectives are eyed at the 100% extension of the September really at 99.85 and the 2024 low / low close at 100.16/35- note that the upper parallel converges on this threshold into the monthly cross. Strength surpassing this slope could fuel another accelerated bout of gains with the next technical consideration eyed at the 1.618% extension at 101.32.
Initial support rests at 98.56/68- a region defined by the weekly low, the May low, and the August high-day close (HDC). A break below this slope would be needed to suggest a more sigfniicant near-term high is in place/ a larger breakdown is underway. Subsequent support seen at the 2018 high / October open at 97.71/82 backed by the yearly low-day close at 97.01 and the 2025 low / July low at 96.22/38- both areas of interest for possible downside exhaustion / price inflection IF reached.
Bottom line: The US Dollar rebounded off uptrend support this week with the Fed-inspired rally now approaching the monthly highs. From a trading standpoint, losses would need to be limited to 98.56 IF price is heading higher on this stretch – look to reduce portions of long-exposure / raise protective stops on a rally towards the upper parallels with a breach above 100.35 needed to suggest a larger trend reversal is underway. Stay nimble into the monthly cross and watch the weekly closes here for guidance. Review my latest US Dollar Weekly Forecast for a closer look at the longer-term DXY technical trade levels.
Key US Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts
- Canadian Dollar Outlook: USD/CAD Threatens Reversal Post-FOMC
- Gold Price Outlook: XAU/USD Crash Halted as Bulls Emerge Ahead of Fed
- Euro Short-term Outlook: EUR/USD Poised for Breakout Ahead of Fed/ECB
- Japanese Yen Short-term Outlook: USD/JPY Six-Day Rally Faces Fed & BoJ
- Australian Dollar Short-term Outlook: AUD/USD Coils for Breakout
- British Pound Short-term Outlook: GBP/USD Slides Towards Key Support
- Swiss Franc Short-term Outlook: USD/CHF Rebound Eyes Resistance Test
Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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