US Dollar Technical Forecast: DXY 4% Rally Stalls at Pivotal Resistance

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

• DXY has rallied more than 4% from the August low, but buyers have repeatedly failed to secure a weekly close above major resistance.
• Weekly momentum has strengthened to its highest level since early 2025, keeping the broader recovery constructive despite the recent stall.
• A sustained break above the current resistance zone would be needed to confirm uptrend resumption and expose the next major upside objectives.
• Initial support has shifted higher, leaving the bulls with room to consolidate without materially damaging the near-term structure.
• With a light U.S. data calendar, Fed expectations, Treasury yields, and tomorrow’s FOMC minutes could drive the next move into the weekly close.
• Resistance 101.92/98 (key), 103, 103.82- Support 101.02, 100.16/42 (key), 99.36

The U.S. Dollar remains pinned beneath a major technical ceiling as Tuesday trade keeps the focus on whether buyers can finally force a decisive break higher. Momentum continues to favor the upside, but the failure to clear resistance leaves DXY vulnerable to near-term consolidation or a deeper pullback if support begins to give way. With the economic calendar relatively light, tomorrow’s FOMC minutes and shifts in Treasury yields could prove decisive in determining whether the current pause resolves into another leg higher or develops into a broader reversal. Battle lines drawn on the DXY weekly technical chart.

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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 DXY had, “rebounded off confluent support with pivotal resistance now in view near the 2024 swing low. From a trading standpoint, losses would need to be limited to 98.68 IF price is heading higher on this stretch with a weekly close above 100.42 still needed to mark uptrend resumption and fuel the next major leg of the advance.” The index broke higher the following week with a three-week rally extending more than 4% off the August low.

The bulls failed to mark weekly close above resistance last week and despite another attempt yesterday, the index remains capped by the May 2025 high and the September 2024 highs at 101.92/98. Note that the 75% parallel of converges on this threshold this week and further highlights the significance of this level. Weekly momentum has now reached the yearly highs with RSI trading at the highest levels since January of 2025. The focus is on this key pivot zone early in the month with a weekly close above needed to mark uptrend resumption.

Subsequent resistance objectives are eyed at the 2016 high close and the 2020 swing high at 103 backed by the upper parallel of the yearly pitchfork (currently ~103.40s) and the 2017swing high at 103.82- both areas of interest for possible topside exhaustion / price inflection IF reached.

Initial weekly support rests with the 38.2% retracement of the August rally at 101.02 with broader bullish invalidation now raised to the 2024 low / low week close (LWC) at 100.16/42. A break / weekly close below this threshold would be needed to suggest a more significant high is in place and a larger correction is underway. Subsequent support rests with the 52-week moving average, currently near 99.36.

Bottom line: The U.S. Dollar rally has extended into resistance early in the month and the focus is on weekly lose with respect this key pivot zone. From a trading standpoint, losses would need to be limited to 101.02 IF price is heading higher on this stretch with a close above 102 needed to fuel the next major leg of the rally.

The U.S. economic docket is relatively light this week, leaving Fed policy expectations and broader risk sentiment to drive the dollar. The focus turns to tomorrow’s release of the FOMC meeting minutes for additional insight into the Committee’s inflation outlook and appetite for further tightening following last month’s rate hike. Attention then shifts to Friday’s preliminary University of Michigan Consumer Sentiment Index, with the accompanying inflation-expectations figures likely to draw particular scrutiny. With few major data releases on tap, shifts in Treasury yields and Fed rate expectations could remain the primary catalysts for the dollar into the weekly close. Stay nimble into the release and watch the weekly close for guidance. Review my latest US Dollar Technical Outlook for a closer look at the near-term DXY technical trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex