US Dollar Technical Forecast: DXY Breakout Failure Threatens the Yearly Uptrend

US Dollar Index Technical Forecast: USD Weekly Trade Levels (DXY)

• DXY has rebounded more than 1% from the August low after a decline of more than 3% from the July high.
• The late-August recovery developed from a major confluence of technical support, reinforcing the significance of the recent low.
• The index has reclaimed its yearly moving average, but buyers still need follow-through to strengthen the broader recovery case. Pivotal resistance remains overhead.
• ADP and Non-Farm Payrolls headline event risk this week as traders reassess the outlook for Fed policy.
• Resistance 100.16/42 (key), 101.37, 101.80/98- Support ~99.10, 98.68 (key), 98.24

The U.S. Dollar is attempting to regain its footing after a sharp summer correction drove DXY more than 3% lower from the July high. A late-August rebound from confluent technical support has carried the index back above its yearly moving average, improving the near-term picture as September trade gets underway. Buyers still have work to do, with a major resistance zone overhead likely to determine whether the recovery can develop into a broader advance or gives way to renewed selling pressure. Battle lines drawn on the DXY weekly technical chart.

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US Dollar Price Chart – USD Weekly (DXY)

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Technical Outlook: In my last US Dollar Technical Forecast we noted that DXY was, “vulnerable to further losses within the 2026 uptrend heading into August. From a trading standpoint, losses would need to be limited to the 52-week moving average for the yearly uptrend to remain viable with a weekly close back above 100.42 needed to fuel another run at the highs.” The index spent a brief stint below the 52-week moving average before rebounding off confluent support at the 50% retracement of the yearly range and the 25% parallel of the 2026 uptrend at 98.68. The recovery has extended more than 1.1% off the August low and the focus into the start of September is on whether this recovery marks resumption of the broader uptrend or just a near-term consolidation before the next drop.

Key weekly resistance remains with the 2024 low / low-week close at 100.16/42. Note that the median line converges on this zone over the next few weeks and a breach / weekly close above this slope threshold would be needed to mark resumption of the uptrend. Subsequent resistance objectives eyed at the yearly high-week close (HWC) at 101.37 and 101.80/98- a region defined by the yearly high, the September 2024 high, and the May 2025 high. Look for a larger reaction there IF reached.

Look for initial support back at the yearly moving average (currently ~99.10) followed by the 99.68. A break / weekly close below this level would threaten a larger correction toward the yearly open at 98.24 and key support at the 2025 low-week close (LWC) at 97.65. Note that the lower parallel converges on this level over the next few weeks and losses below this slope would validate a break of the yearly uptrend and put the bears back in control.

Bottom line: The U.S. Dollar rebounded off confluent support with pivotal resistance now in view near the 2024 swing low. From a trading standpoint, losses would need to be limited to 98.68 IF price is heading higher on this stretch with a weekly close above 100.42 still needed to mark uptrend resumption and fuel the next major leg of the advance.

Event risk picks up over the next few days with the ADP private-sector employment report due tomorrow, followed by the highly anticipated Non-Farm Payrolls release on Friday. Treasury yields have surged in recent sessions as the escalating Iran conflict pushed WTI back toward the $90 mark, renewing concerns over the inflation outlook. With the Fed increasingly focused on price stability, a resilient labor market could reinforce expectations for further policy tightening and keep the U.S. dollar supported. Conversely, signs of weakness in employment could challenge the recent rise in rate expectations and take some steam out of the greenback’s advance. Stay nimble into the releases and watch the weekly close for guidance. Review my latest US Dollar Technical Outlook for a closer look at the near-term DXY technical trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex