US Dollar Short-term Outlook: USD Set to Snap 7-Day Slide Before NFP

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

US Dollar plunges nearly 5.5% off May high- breaks through key support
USD rebound off trend support in focus ahead of Non-Farm Payrolls tomorrow
DXY Resistance 97.71-98.39, 99.41/58 (key), 100.35- Support 96, 94.63/98 (key), 93.93

The US Dollar Index is poised to snap a seven-day losing streak with DXY rebounding off trend support into the start of the month. A break below a major pivot zone last week keeps the technical outlook weighted to the downside with the immediate focus on this near-term recovery. Battles lines drawn on the DXY short-term technical charts heading into NFPs tomorrow.

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 last month’s US Dollar Short-term Outlook we noted that DXY was, “testing critical support at the yearly lows with the weekly opening-range intact... 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.” The index registered an intraday high at 99.42 last week before marking an outside-weekly reversal with a break below key support extending more than 3% off the monthly high.

A seven-day decline takes DXY into channel support with the index rebounding ahead of tomorrow’s highly anticipated U.S. employment report. The risk rises for a larger recovery within the multi-month downtrend with the broader technical outlook still tilted to the downside while within this formation.

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 carving the weekly range just above channel support with today’s recovery approaching the objective weekly open at 97.19. Resistance now stands at former support around 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. Rallies should be limited to this key pivot zone IF price is heading lower on this stretch. Ultimately, a breach / close above the June open / 2023 swing low at 99.40/57 (bearish invalidation) would be needed to suggest a more significant low is in place / a larger reversal is underway.

Look for initial support near the 96-handle with the next major technical consideration seen at 94.63-98- a region defined by the March 2020 swing low, the 2022 low, and the 100% extension of the 2022 decline. Subsequent support seen at the 78.6% retracement of the 2018 advance at 93.93. Both these levels represent areas of interest for possible downside exhaustion / price inflection IF reached.

Bottom line: The U.S. Dollar broke below a major pivot-zone last month with the most recent decline rebounding off downtrend support yesterday. From a trading standpoint, rallies should be limited to 98.39 IF price is heading lower on this stretch with a close below 96-needed to fuel the next leg of the decline.

Keep in mind we are in the early throws of the July opening-range with U.S. Non-Farm Payrolls on tap tomorrow ahead of the holiday weekend. Stay nimble into the release 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

Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.