US Dollar Technical Forecast: USD Bulls Face the Fed - Breakout Looms
US Dollar is coiled ahead of the FOMC, with breakout potential building as markets brace for Fed guidance. Battle lines drawn on the DXY technical chart.
Share this:
US Dollar Index Technical Forecast: USD Weekly Trade Levels (DXY)
- US Dollar rebounds nearly 3.5% off yearly lows- stalls at major pivot zone
- USD October range contracts ahead of the FOMC- breakout imminent
- Markets fully priced for a 25bps cut- Fed forward guidance drive volatility
- DXY Resistance 99.59/67, 100.16/42 (key), 101.55- Support 97.50/65 (key), 96.94, 96.38
The US Dollar is coiling just below resistance, with DXY trading within a contractionary range ahead of tomorrow’s FOMC rate decision. With markets fully priced for a rate cut this week, traders will be closely eyeing the Fed’s forward guidance, and the focus is on a breakout to determine whether a larger recovery or renewed weakness will take hold into November. Battlelines drawn on the DXY weekly technical chart.
Review my latest episode of the Opening Bell for an in-depth breakdown of this USD setup and more. Join live on Monday’s at 8:30am EST.
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 had, “defended multi-year downtrend support last month with the index nearly marking a monthly Doji in September… From a trading standpoint, losses would need to be limited to 96.94 IF the index is indeed heading higher on this stretch with a close above 98.71 needed to fuel a larger recovery in the Dollar.” The index rallied nearly 3.5% off the yearly lows before stalling, with price consolidate within the first weekly range of October heading into the highly anticipated FOMC rate decision tomorrow. The focus is on a breakout of this range to drive the next directional move as we head into the close of the month.
Weekly support rests with the 61.8% retracement of the mid-September rally / 2025 low-week close (LWC) at 97.50/65. A break / weekly close below this threshold would threaten downtrend resumption toward the 2021 high at 96.94 and the June low at 96.37 – both areas of interest for possible downside exhaustion / price inflection IF reached. The next major technical consideration rests 94.65/97- a key pivot-zone defined by the March 2020 swing low, the 78.6% retracement of the 2021 advance, and the 100% extension of the 2023 decline. Look for a larger reaction there IF reached.
Weekly resistance is eyed at the 2023 low / 209 high / April low-week close (LWC) at 99.59/67 with bearish invalidation just higher at the 2024 low / LWC at 100.16/42- a breach / weekly close above this threshold is needed to suggest a more significant low is in place / a larger trend reversal is underway. Subsequent resistance objectives eyed at the 38.2% retracement of the yearly range at 101.55 and the 52-week moving average at 101.98.
Bottom line: The U.S. Dollar is coiled just below resistance, and the focus is on a breakout of the 97.50-99.66 range for guidance heading into the close of the month. From a trading standpoint, losses should be limited to 97.50 IF the Dollar is higher on this stretch with a breach above 100.41 needed to validate a more significant breakout in price.
Keep in mind markets are fully priced for a 25bps cut tomorrow and the focus will be on expectations for the December rate decision and whether the central bank will be ending QT (quantitative tightening). As it stands, markets are pricing an 88% chance the Fed will cut another 25bps into the close of the year. Stay nimble into the release & subsequent presser with Powell and watch the weekly / monthly close for guidance here. Review my latest US Dollar Short-term Outlook for a closer look at the near-term DXY technical trade levels.
Key Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Weekly Technical Charts
- Euro (EUR/USD)
- Gold (XAU/USD)
- Swiss Franc (USD/CHF)
- Australian Dollar (AUD/USD)
- British Pound (GBP/USD)
- Japanese Yen (USD/JPY)
- Crude Oil (WTI)
- Bitcoin (BTC/USD) / Ethereum (ETH/USD)
- S&P 500, Nasdaq, Dow
- Canadian Dollar (USD/CAD)
--- Written by Michael Boutros, Sr Technical Strategist
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.