US Dollar Technical Forecast: USD Exhaustion- DXY Turns Ahead of Fed

US DOLLAR TECHNICAL PRICE OUTLOOK: DXY WEEKLY TRADE LEVELS

  • US Dollar technical trade level update – Weekly Chart
  • USD exhausts into uptrend resistance- risk for deeper pullback heading into FOMC
  • DXY weekly support 104.77/88, 103 (key), 101.94 – Resistance 108.09110.25 (key), 111.31

The US Dollar Index snapped a three-week winning streak with the DXY off more than 1.5% to trade at 106.48 ahead of the US close on Friday. The decline comes on a heels of a reversal off technical resistance and while the broader outlook remains constructive, a deeper correction may already be underway within the broader uptrend. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart heading into next week’s crucial FOMC interest rate decision. Review my latest Strategy Webinar for an in-depth breakdown of thisDXY technical setup and more.

US DOLLAR INDEX PRICE CHART – DXY WEEKLY

US Dollar Technical Forecast: USD Exhaustion- DXY Turns Ahead of Fed

Chart Prepared by Michael Boutros, Technical Strategist; US Dollar Index on Tradingview

Notes: In last month’s US Dollar Weekly Price Outlook we noted that the DXY, “rally has accelerated into uptrend resistance and stabilization above 108 is needed to keep the immediate advance viable in the weeks ahead.” In intraweek stretch into slope resistance (blue trendline) failed with the index unable to close above the 2001 low at 108.09. The subsequent reversal has already plunged more than 2.9% off the yearly highs and the focus is on this correction within the broader yearly uptrend.

Initial weekly support is now seen at the July monthly open / 1999 high at 104.77/88 – an area of interest for possible downside exhaustion IF reached. Broader bullish invalidation remains steady at the 2019 high close at 103. A topside breach / close above 108.09 is still needed to mark resumption of the broader uptrend with such a scenario exposing subsequent resistance objectives at the yearly high (109.29) and the 78.6% Fibonacci retracement / upper parallel at 110.25– looking for a larger reaction in price there IF reached.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line:The US Dollar is vulnerable to further losses on the back of this exhaustion high with the FOMC interest rated decision on tap next week. From at trading standpoint, the threat is for a deeper correction within the broader uptrend – we’re on the lookout for downside exhaustion ahead of 104.77/88 IF price is still heading higher on this stretch. Ultimately, a steeper pullback may offer more favorable opportunities closer to trend support. Keep in mind the highly anticipated Fed rate decision is on tap next and is likely to fuel added volatility in the greenback- stay nimble into the release. I’ll publish and updated US Dollar Price Outlook once we get further clarity on the short-term DXY technical trade levels.

US ECONOMIC CALENDAR

US Dollar Technical Forecast: USD Exhaustion- DXY Turns Ahead of Fed

Economic Calendar – latest economic developments and upcoming event risk.

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