US Dollar Short-term Outlook: USD Tests Critical Support Zone
US Dollar bears are testing a key support pivot at the monthly range lows ahead key inflation data tomorrow. Battle lines drawn on the DXY short-term technical chart.
Share this:
US Dollar Index Technical Outlook: USD Short-term Trade Levels
- US Dollar plunges nearly 2.2% in August- testing key support at monthly range lows
- USD risk for price inflection into monthly cross- Core PCE, Non-Farm Payrolls on tap
- DXY Resistance 99.69, 99.22, 99.58 (key)- Support 97.71/86 (key), 97.21, 96.65/78
The US Dollar has come under renewed pressure, with the DXY Index sliding into a critical support zone. This area has defined the floor for recent trade and marks a pivotal inflection point for near-term direction. Battle lines are drawn on the DXY short-term technical charts heading into the September opening-range.
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 DXY, “pullback is searching support as the bulls attempt to validate the July breakout. From a trading standpoint, losses should be limited to the lower parallel IF price is heading higher on this stretch with a close above 100.35 needed to fuel the next major leg of the advance.” The index dropped into lateral support days later with the bulls holding this last line of defense for over two weeks now. Risk for price inflection into this zone with the immediate focus still on a breakout of the Friday 8/22 outside-reversal candle for guidance.
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 just above key support at 97.71/86- a region defined by the 2018 swing high, the objective weekly open, and the e61.8% retracement of the July advance. A break / close below this threshold is needed to invalidate the July advance / threaten resumption of the broader downtrend. Subsequent support objectives seen at the 78.6% retracement at 97.21, the 2025 low-day close (LDC) / July open at 96.65/78, and the yearly low at 96.38.
Initial resistance is eyed at the May low at 98.69 and is backed by the 61.8% retracement of the monthly range at 99.23 and the 2023 low at 99.258- both levels of interest for possible topside exhaustion / price inflection IF reached. Ultimately, a breach / close above key resistance at the 2024 low / low close at 100.15/35 is needed to suggest a larger trend reversal is underway.
Bottom line: The US Dollar has pulled back into key support at the monthly range lows, and the focus is on a possible inflection off this mark in the days ahead. From a trading standpoint, rallies would need to be limited to 99.58 IF price is heading lower on this stretch with a break below the July up-slope / 97.71 needed to fuel the next leg of the decline.
Keep in mind we get the release of the Core Personal Consumption Expenditure tomorrow into the extended holiday weekend with Non-Farm Payrolls on tap next week. Stay nimble into the monthly cross 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
- British Pound Short-term Outlook: GBP/USD Threatens July Downtrend
- Japanese Yen Short-term Outlook: USD/JPY Tests Uptrend Support
- Canadian Dollar Short-term Outlook: USD/CAD Coils Within July Uptrend
- Australian Dollar Short-term Outlook: AUD/USD Recovery at Resistance
- Gold Short-term Outlook: XAU/USD Rebound Testing Key Resistance
- Swiss Franc Short-term Outlook: USD/CHF Pullback Eyes Uptrend Support
Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on X @MBForex
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
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.
Silver forecast: metals liquidation drags XAG/USD into $50-55 support
Silver has broken its July low and slipped into a long-term support zone as the selling in precious metals deepens. The chart shows where the metal could bottom, and next week's Fed decision may decide whether it does.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.