US Dollar Price Forecast: USD Bulls Eye Resistance at Yearly Highs

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By :  ,  Sr. Technical Strategist

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

  • US Dollar defends monthly range low- rallies nearly 1.5% in three-days
  • USD rally approaching key resistance near yearly highs- Major event risk on tap
  • DXY resistance 107.18, 108.09, 108.97 – Support 105.39/67 (key), ~104.50s, ~103.85

The US Dollar bulls are back on offense with a three-day rally off the monthly lows now within striking distance of the yearly highs. Major event risk is on tap into the monthly cross with US inflation data, the Fed rate decision and NFPs likely to shape the November open. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart.

Review my latest Weekly Strategy Webinar 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)

US Dollar Price Chart - USD Weekly - DXY Trade Outlook - Technical Forecast - 10-26-2023
Chart Prepared by Michael Boutros, Sr. Technical Strategist; 
DXY on TradingView

Technical Outlook: In my last US Dollar Technical Forecast we noted that the DXY rally had, “extended into confluent uptrend resistance and while the broader outlook remains weighted to the topside, the immediate advance may be vulnerable here below 107. From a trading standpoint, losses should be limited to 105.39 IF price is heading higher on this stretch with a topside breach needed to fuel the next major leg higher in the greenback.” Price pulled back the following week with the index registering an intraweek low at 105.36 this week before reversing sharply higher. A close at these levels would validate an outside weekly-reversal and would keep the focus on a test of uptrend resistance.

A breach / close above 107.18 is still needed to mark resumption with subsequent resistance objectives eyed at the 2001 low (108.09) and the 61.8% Fibonacci retracement of the 2022 decline at 108.97- an area of interest for possible topside exhaustion / price inflection IF reached.

We’ll now raise our near-term bullish invalidation level to weekly support at 105.39/67 – a break / weekly close below this threshold would threaten a deeper correction towards the median-line (currently ~104.50s) and the 52-week moving average near ~103.85. Broader bullish invalidation remains unchanged at 102.99-103.49- a region defined by the 2016 high-close, the January low-week close, and the objective yearly open.

Bottom line: The US Dollar has reinforced a key range between 105.39-107.18 – looking for the breakout for guidance with the long-bias still vulnerable while below. From a trading standpoint, losses should be limited to this week’s low IF price is heading higher on this stretch with a breach / close above the upper parallels needed to fuel the next leg higher in price.

Keep in mind, key US inflation data (PCE) is scheduled for tomorrow, with the Federal Reserve interest rate decision and Non-Farm Payrolls (NFP) on tap into the November open. Stay nimble in the days ahead and look for the weekly close to validate the breakout. Review my latest US Dollar Short-term Outlook for a closer look at the near-term DXY technical trade levels.

Key Economic Data Releases

US Economic Calendar  USD Key Data Releases  DXY Weekly Event Risk  US Dollar Technical Outlook  102

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

Follow Michael on Twitter @MBForex

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