US Dollar short-term outlook: USD collapses to yearly low- DXY levels

US Dollar Index technical outlook: DXY short-term trade levels

US Dollar Index breaks April opening-range- plunges more than 4.7% off yearly highs
USD five-week sell-off now threatening break below yearly low
DXY resistance 101.73/91, ~102.20s, 102.95/99– support 100.82, 100, 99.67

The US Dollar Index is attempting to mark a fifth-consecutive weekly decline with DXY down more than 4.7% from the yearly highs to test the January yearly lows. While a break of the monthly opening-range does keep the focus lower, we’re looking for possible inflection into this zone with a close below to threaten the next major leg lower in the Dollar. These are the updated targets and invalidation levels that matter on the DXY short-term technical charts.

Discuss this USD setup and more in the Weekly Strategy Webinars on Monday’s at 8:30am EST.

US Dollar Index Price Chart – DXY Daily

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

Technical Outlook: In last month’s US Dollar Index short-term outlook, we noted that DXY was, “testing a key support zone at 101.73/90- a region defined by the 2023 low-day close and the 78.6% Fibonacci retracement of the yearly range. Looking for a reaction into this zone for guidance with the immediate decline vulnerable while above.” Price rallied more than 1.4% off those lows before faltering just ahead of the objective yearly open at 103.49.

Since then, the index has plunged more than 2.3% with a break of the monthly opening-range lows today taking the DXY into the yearly lows at 100.82- a close below this threshold is needed to keep the immediate decline viable.

US Dollar Index Price Chart – DXY 240min

Chart Prepared b/y Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Notes: A closer look at USD price action shows DXY continuing to trade within the confines of the descending pitchfork formation highlighted last month with a break of the weekly opening-range yesterday fueling a sell-off into the lows- looking for possible price inflection here.

Initial resistance now eye back at the February low-day close / March low at 101.73/91 and is backed by upper parallel (currently ~102.20s). Ultimately a close above the 2016 high-close / 2020 high at 102.95/99 is needed to suggest a more significant low is in place / a larger reversal is underway.

A break lower from here exposes the psychological 100 barrier backed closely by the 2019 high at 99.67, the February 2020 high-week close at 99.34 and the 61.8% Fibonacci retracement of the 2021 advance at 98.97- look for a larger reaction there IF reached.

Bottom line: A break of the weekly / monthly opening-ranges in US Dollar Index takes DXY into the yearly lows- looking for a reaction here. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to 102 IF price is heading lower here with a break threatening another leg lower in the index towards 100 and beyond. Review my latest US Dollar weekly technical forecast for a longer-term look at the DXY trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor