US Dollar Index Technical Outlook: DXY Short-term Trade Levels
- US Dollar Index rally extends into confluent slope resistance
- USD threat for price inflection into resistance- constructive while above weekly low
- DXY resistance 104.20/40 (key), 104.79, 105- support 103.49/64, 102.95/99, ~102.40
The US Dollar Index is attempting a fourth consecutive daily advance (third weekly advance) with DXY now testing multi-month downtrend resistance. The battle-lines are drawn as the bulls attempt to break the September downtrend. These are the updated targets and invalidation levels that matter on the DXY short-term technical charts into the close of the month.
US Dollar Index Price Chart – DXY Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Technical Outlook: In my last US Dollar short-term outlook, we examined whether or not a more significant low was in place for the year with, “A rebound off downtrend support is threatening a larger recovery towards downtrend resistance.” A breakout of the monthly opening-range on May 12th fueled a rally of more than 3.1% off the monthly lows with the advance now testing multi-month downtrend resistance. Looking for a reaction off this mark in the days ahead.
US Dollar Index Price Chart – DXY 240min
Chart Prepared b/y Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Notes: A closer look at USD price action shows DXY trading within the confines of an ascending pitchfork extending off the April / May lows with the rally now testing confluent slope resistance near ~104.20/30- threat for exhaustion / price inflection into this threshold.
Initial support rests with at the objective yearly open / 1.618% Fibonacci extension of the April advance at 103.49/63 with near-term bullish invalidation now raised to the 2016 high-close / 2020 high at 102.95/99. Ultimately a break below this uptrend is needed to threaten another run at key support near 101.58/67.
A topside breach / close above this resistance zone is needed to keep the immediate long-bias viable towards the 78.6% retracement of the yearly range at 104.79 and the upper parallel (currently ~105). Key resistance is eyed at 105.63-106.15- a region defined by the January high, the March high-day close, the 200-day moving average and the 38.2% retracement of the 2022 decline. Look for a larger reaction there IF reached.
Bottom line: A rebound off downtrend support is now testing downtrend resistance- risk for price inflection here. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to the 103-handle IF price is heading higher on this stretch with a close above this key slope confluence needed to mark uptrend resumption / suggest a larger reversal is underway. Review my latest US Dollar weekly technical forecast for a longer-term look at the DXY trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex