US Dollar Short-term Outlook: USD Rally Vulnerable at Major Resistance

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

• USD has rebounded nearly 2% after breaking out of the May range / March downtrend.
• The rally is now testing a major resistance zone near at the highs of the recent recovery.
• A rejection here would threaten a pullback within the broader recovery structure while a breakout would open the door for another leg higher toward key resistance levels.
• DXY Resistance 99.49/52, 100.16/35 (key), 101.00/14- Support 98.95, 98.55/68 (key), 98.13/24

The US Dollar has rallied strongly off the monthly lows after breaking out of the March downtrend, but the advance is now pressing into a major pivot zone that could determine the next directional move. While the broader recovery structure remains constructive near-term, the rally is beginning to show signs of vulnerability as price tests a key technical barrier. The focus now shifts to whether buyers can force a breakout or if the move stalls into another reversal lower. A weekly range is poised for breakout- 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 my last US Dollar Short-term Outlook we noted that the May opening-range was taking shape above support and that, “While the medium-term outlook remains weighted to the downside, the immediate decline may be vulnerable into major support just lower. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a drop towards the median-line - rallies would need to be limited to the 200-day moving average IF price is heading lower on this stretch..” The index broke through the monthly opening range high the following week with DXY breaking out of the March downtrend. The rally extended more than 1.9% off the monthly low with price testing major resistance today at the January swing high, the 61.8% retracement of the March decline and the April gap fill at 99.49/52. The focus is on a reaction off this level with the immediate long-bias vulnerable while below.

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 monthly low with the weekly range set just below key resistance. Initial support rests with the weekly low at 98.95 backed by 98.55/69- a region defined by the 200-day moving average, The May opening range high, the August high-day close (HDC), and the May low. Note that the lower parallel converges this zone into next week and a break / close below this slope would be needed to suggest a more significant high is in place and invalidate the monthly uptrend. Subsequent support seen at the yearly / monthly opens at 98.13/24 with 94.50/65 still critical (61.8% retracement & 2025 low-week close).

A topside breach / close above this key pivot zone exposes key resistance at 100.16/35- a region defined by the 2024 swing low, the August high, the November close high, and the 2024 low close. Look for a larger reaction there IF reached with a breakout of this formation needed to fuel the next major leg of the advance towards 101.

Bottom line: The weekly opening-range remains intact just below major resistance – look for the breakout to offer guidance here. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- losses would need to be limited to the 200-day moving average IF price is heading higher on this stretch with a close above 99.52 needed to fuel the next leg of the advance.

Keep in mind we get the release of key U.S. inflation data next week with the Fed’ preferred inflationary gauge,  Personal Consumption Expenditures, on tap. 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.

Active Short-term Technical Charts

• Canadian Dollar Short-term Outlook: USD/CAD Breakout Faces First Major Test
• Swiss Franc Short-term Outlook: USD/CHF Breakout Faces First Major Hurdle
• Euro Short-term Outlook: EUR/USD Five-day Selloff Breaks May Lows—1.16 Now in Focus
• Gold Price Short-term Outlook: XAU/USD Rebound Stalls at Resistance—Range Breakout in Focus
• Australian Dollar Outlook: AUD/USD Pullback Tests Uptrend Support—Next Move Critical
• British Pound Short-term Outlook: GBP/USD Tests Breakout—False Break Risk
• Japanese Yen Short-term Outlook: USD/JPY Bulls Eye Yearly High- Fed on Tap

Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex