US Dollar Short-term Outlook: USD Holds Key Support Before NFPs
US Dollar plunged into critical support at the yearly lows with the weekly range intact ahead of NFPs. Battle lines drawn on the DXY short-term technical charts.
Share this:
US Dollar Index Technical Outlook: USD Short-term Trade Levels
- US Dollar plunges nearly 3.56% off May high- now testing critical support at yearly lows
- USD weekly opening-range intact heading into Non-Farm Payrolls tomorrow
- Resistance 98.93, 99.41/58 (key), 100.35/59- Support 97.71-98.39 (key), 97, 96
The US Dollar Index is testing a major pivot zone early in the month with the weekly rang intact ahead of NFPs- bears on notice. Battles lines drawn for the bulls 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 my last US Dollar Short-term Outlook we noted that DXY had broken below the April uptrend and that, “From a trading standpoint, rallies would need to be limited to 100.65 IF the index is heading lower on this stretch with a close below 99.40 needed to fuel the next leg of the decline.” The index briefly registered an intraday high at 100.54 later that week before reversing sharply with a decline of nearly 3.6% now testing a pivotal support zone. The focus is on a reaction off this mark with building momentum divergence suggesting the immediate decline may be vulnerable heading into NFPs tomorrow.
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 holding within the weekly opening-range heading into the close of trade on Thursday. Initial resistance is eyed with the May low-day close (LDC) at 98.93 and is backed by near-term bearish invalidation at 99.41/58- a region defined by the weekly / monthly open and the 2023 swing low. Note that the February channel line converges on this threshold into the close of the week and a breach / close above would be needed to suggest a more significant low is in place / a larger reversal is underway.
Critical support rest at 97.71-98.39- a region defined by the 2018 swing high, the April lows, and the 61.8% retracement of the broader 2018 advance. A break / close below this threshold is needed to mark downtrend resumption and would threaten another bout of accelerated declines towards the 97 & 96-handles. The next major technical consideration rests with the March 2020 low / 2022 low / 100% extension of the 2022 decline at 94.63/98- look for a larger reaction there IF reached.
Bottom line: The U.S. Dollar has is testing critical support at the yearly lows with the weekly opening-range intact heading into tomorrow’s employment report. The immediate focus is on a breakout of this range with the broader short bias vulnerable while above the yearly low. From a trading standpoint, rallies would need to be limited to 99.57 IF price is heading lower on this stretch with a close below 97.71 needed to fuel the next major leg of the decline.
Keep in mind U.S. Non-Farm Payrolls are on tap tomorrow morning with key inflation data (CPI) slated for next week. Stay nimble into the releases 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
- British Pound Short-term Outlook: GBP/USD Bulls Eye Breakout
- Australian Dollar Short-term Outlook: AUD/USD Poised for Breakout
- Euro Short-term Outlook: EUR/USD Coils Below Resistance Ahead of ECB, NFP
- Swiss Franc Short-term Outlook: USD/CHF Bulls Emerge at Support
- Gold Short-term Outlook: XAU/USD Poised for June Breakout
- Japanese Yen Short-term Outlook: USD/JPY Retreats from Resistance
- Canadian Dollar Short-term Outlook: USD/CAD Reversal Risk Builds
Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on X @MBForex
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY Weekly Outlook: AI earnings could overshadow the Fed and BoJ
AI sentiment has become a major driver of US Treasury yields and USD/JPY. With Microsoft, Alphabet and Amazon reporting this week, central bank decisions may have competition for traders' attention.
US Dollar Price Action Setups: EUR/USD, USD/JPY, GBP/USD, USD/CAD
The Dollar is working on its second consecutive red week and while sellers didn’t exactly pounce on fresh lows, there’s an opening door for bears to make a move.
Silver forecast: metals liquidation drags XAG/USD into $50-55 support
Silver has broken its July low and slipped into a long-term support zone as the selling in precious metals deepens. The chart shows where the metal could bottom, and next week's Fed decision may decide whether it does.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.