US Dollar Short-term Outlook: USD Coils Between Key Levels – Breakout Looms

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

• DXY 1.5% decline off the February high and remains confined within the late-January uptrend.
• Bulls are attempting to validate the break of a multi-week downtrend- monthly opening-range preserved.
• Key event risk on tap with Fed minutes later today and Core PCE / Q4 GDP Friday
• DXY Resistance 97.88/97 (key), 98.24, 98.55/68- Support 96.88/90, 96.48/65 (key), 95.61/81

The US Dollar stalled at resistance early in the month, leaving price action contained within a well-defined consolidation band. The recent pullback keeps the index within the confines of the late-January uptrend with the opening range now clearly established and the next sustained move beyond its boundaries is likely to dictate near-term direction. Until that resolution occurs, the Dollar remains in compression, awaiting confirmation of whether the near-term recovery attempt can build or selling pressure reasserts. 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 DXY had plunged to the lowest levels since February of 2022 and that, “From a trading standpoint, rallies should be limited to 97.45 IF price is heading lower on this stretch with a close below 95.60 needed to fuel the next leg of the decline.” The index rallied more than 2.5% off the lows into the February open with the monthly opening-range high registering at resistance near the December low-close and the 50% retracement of the November decline at 97.88/97.

A decline of 1.5% off the February high rebounded off support last week at the 61.8% retracement and the 2025 low-close at 96.48/65. DXY is trading at the objective monthly open today and the focus is on this near-term recovery with the February opening-range defined by between key technical zones. Looking for a breakout into the close of the month for guidance.

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 trading within the confines of a proposed ascending pitchfork extending off the January low with the lower parallel converging on near-term support at the weekly open and the 61.8% retracement of the most recent advance at 96.88/90. Ultimately, a break below 96.48 would be needed to threaten resumption of the downtrend. Subsequent support objectives are eyed at the 2.618% of the January decline and the 2026 low-day close (LDC) at 95.61/81 backed by a more significant technical confluence at 94.97-95.21- a region defined by the 100% extension of the 2022 decline and the 1.618% extension of the November decline.

A break of the weekly range high would expose resistance at 97.88/97- look for a larger reaction there with a breach / daily close above needed to fuel the next leg of this advance. Subsequent resistance objectives are eyed at the yearly open at 98.24 and 98.55/68- a region defined by the 61.8% retracement of the November decline, the May low, and the August high-day close (HDC). Strength beyond this threshold would be needed to suggest a more significant low is in place and a larger trend reversal is underway in the US Dollar.

 

Bottom line: The US Dollar index is attempting to breakout of the January downtrend, and the focus is on whether this near-term recovery will extend for a test of the monthly range high. From a trading standpoint, losses should be limited to 96.88 IF price is heading higher on this stretch with a close above 97.97 needed to fuel the next major leg of the advance.

Keep in mind we get the release of Fed minutes today with key inflation data (Core PCE) and the preliminary read on Q4 GDP on tap Friday. The GDP figures are expected to show the US economy grew at an annualized pace of just 3% after a previous print of 4.4%. It is important to note that this data is clouded by the longest US government shut down in history (43days). 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. 

Key US Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex