US Dollar Technical Forecast: USD Poised for Breakout into FOMC
US Dollar remains in a six-week contractionary range below resistance with the breakout risk building into FOMC. Battle lines drawn on the USD weekly technical chart.
Share this:
US Dollar Index Technical Forecast: USD Weekly Trade Levels (DXY)
- US Dollar locked in six-week contractionary range below resistance
- USD range resolution to provide near-term direction- breakout risk builds into FOMC
- DXY Resistance 99.75, 99.58/83, 100.42 (key)- Support 96.94, 96.38 (key), 94.65/98
The US Dollar continued to coil this week, with DXY contracting for a sixth-consecutive week. The focus now turns to the FOMC interest rate decision on Wednesday as traders look for a catalyst to drive a breakout. A decisive move out of this range is likely to offer directional clarity into the close of the month and the battle lines are drawn on the DXY weekly technical chart.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this USD setup and more. Join live on Monday’s at 8:30am EST.
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, “the focus is on a breakout of the 96.94-99.84 range for guidance here- ultimately, rallies should be limited to 101.65 IF USD is heading for a break lower with a close below 96.38 needed to mark downtrend resumption.” The range is preserved into mid-September with price continuing to contract below the 50% retracement of the August decline at 98.75. Looking for a breakout in the days ahead with the FOMC interest rate decision on tap next week.
Support rests with the 2021 swing high at 96.94 and is backed by the yearly lows at 96.38- note that the median-line of a multi-year pitchfork converges on this threshold and a break / weekly close below this slope would be needed to mark resumption of the broader downtrend. Subsequent support seen at the March 2020 low / 100% extension of the 2022 decline at 94.65/97 and the 2021 opening-range high at 93.44.
A topside breach / close above the 98.75 is needed to suggest a more significant low is in place / a larger recovery is underway with subsequent resistance seen at 99.58/83- a region defined by the 2023 low, the April low-week close (LWC) and the 61.8% retracement of the May decline. Broader bearish invalidation remains with the 2024 LWC at 100.42.
Bottom line: The U.S. Dollar has continued to trade within a contractionary range just below resistance for the past six-weeks and we’re looking for a breakout of the September opening-range for guidance in the days ahead. From at trading standpoint, losses would need to be limited to 96.94 IF the index is heading for a larger recovery here with a close above 98.75 needed to fuel the next leg higher.
Keep in mind the Federal Reserve interest rate decision is on tap Wednesday with markets widely anticipating a 25 basis pointcut from the central bank. The focus will be on the updated Summary of Economic Projections as they pertain to growth, inflation & employment with the interest rate dot plot likely to fuel the bulk of the volatility. Stay nimble into the release and watch the weekly closes for guidance. I’ll publish an updated US Dollar Short-term Outlook once we get further clarity on the near-term DXY technical trade levels.
Key Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Weekly Technical Charts
- Euro (EUR/USD)
- Canadian Dollar (USD/CAD)
- British Pound (GBP/USD)
- Japanese Yen (USD/JPY)
- S&P 500, Nasdaq, Dow
- Swiss Franc (USD/CHF)
- Gold (XAU/USD)
- Australian Dollar (AUD/USD)
- Crude Oil (WTI)
--- Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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
S&P 500, Nasdaq, Dow Forecast: Nasdaq Selloff Deepens as Dow Rally Stalls 10 24 2026
A failed S&P breakout and looming Nasdaq support test raise the stakes for next week’s Fed decision and October’s monthly close.
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.
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.