US Dollar Short-term Outlook: USD Uptrend Faces Make-or-Break Test After CPI

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

• The US Dollar is testing the integrity of its May uptrend after reversing sharply from thirteen-month highs.
• Post-CPI selling pressure has pushed DXY back into a major support zone with the weekly and monthly opening ranges intact just above.
• A sustained break below support would increase the case for a broader USD correction.
• A successful defense of support would keep the broader bullish structure intact and refocus attention on the yearly highs.
• PPI and Retail Sales later this week could provide the catalyst for the next major move in the Dollar.
• DXY Resistance 101.77/92 (key), 102.72, 102.95/99- Support 101.145, 100.64/77 (key), 100.15/35

The U.S. Dollar is testing a critical technical inflection point after reversing sharply from thirteen-month highs following the CPI release. DXY has pulled back into confluent support as the weekly and monthly opening ranges take shape, placing the May uptrend under pressure without yet confirming a broader reversal. With PPI and Retail Sales still ahead, the focus is on whether buyers can defend this support zone or if a break lower opens the door to a deeper correction. Battle lines drawn on the DXY short-term technical charts.

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 approaching major resistance at thirteen month highs and that, “From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 101.77/92- losses would need to be limited to 100.64 IF price the index is heading higher on this move. Ultimately, the bulls would need to secure a close above 102 to fuel the next major leg of the rally.” DXY registered an intraday high at 101.80 the following day before reversing sharply into the close of the month. The decline registered an intraday low at 100.55 into the June open with the monthly opening-range now taking shape just above confluent support. The focus is on a breakout in the days to drive the next leg in price.

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 attempting to break the May uptrend with the post-CPI decline halting at lateral support around 100.64/77- a region define by the March high and the 1.618% extension of the January advance. Losses below this mark would invalidate the May uptrend with key support steady at the 2024 low/ low-close at 100.15/35. A break / daily close below this key pivot zone would suggest a more significant high is in place and a larger trend reversal is underway. The next technical consideration rests with the January / May highs at 99.49/54.

Monthly open resistance is eyed at 101.22 and is backed closely by the yearly high-day close (HDC) at 101.59. Critical resistance remains with the 2024 high / HDC at 101.77/92- a breach / daily close above this threshold is needed to mark uptrend resumption and fuel the next major leg of the rally. Subsequent resistance objectives are eyed at the 100% extension at 102.72 and the 2016 high-close and 2020 high at 102.95/99.

Bottom line: The U.S. Dollar is attempting to break the May uptrend here with the weekly & monthly opening ranges set just above support. From a trading standpoint, rallies would need to be limited to 101.22 IF the index is heading lower on this stretch with a close below 100.64 needed to fuel the next leg lower. Look for a larger reaction on drop towards 100.15/35 IF reached.

Keep in mind we get the release of the June Produce Price Index (PPI) tomorrow with retail sales on tap Thursday. Stay nimble into the release and watch the weekly close for guidance here. 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

• Euro Short-term Outlook: EUR/USD Coils Above Critical Support- Decision Time
• Gold Price Short-term Outlook: XAU/USD Bulls Try to Carve Out a Low After 30% Drop
• Canadian Dollar Short-term Outlook: USD/CAD Coils Below Resistance—Breakout Looms
• Australian Dollar Outlook: AUD/USD Holds Major Support—Reversal Risk Builds
• Swiss Franc Short-term Outlook: USD/CHF Overbought Rally Tests Major Resistance
• Japanese Yen Short-term Outlook: USD/JPY Breakout Stalls at 2024 High as Intervention Risk Builds
• British Pound Short-term Outlook: GBP/USD Rebound Challenges Bear Trend

Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex