US Dollar Price Forecast: USD Four-Week Rally at Risk into Resistance

US Dollar Index Technical Forecast: DXY Weekly Trade Levels

• US Dollar four-week rally off support approaching March downtrend resistance
• USD risk for topside exhaustion / price inflection- monthly opening-range break pending
• DXY resistance 103.00/49 (key), 104.63, ~105– support 101.08, 98.97-99.66, 97.25/69

The US Dollar surged more than 3.2% off the July / yearly low with a four-week rally in DXY now approaching a major technical confluence into downtrend resistance. The battle lines are drawn of the greenback as the bulls attempt to assert a larger counter-offensive. 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 Index Price Chart – DXY Weekly

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

Technical Outlook: In last month’s US Dollar Index Technical Forecast we noted that DXY was, “getting a reprieve from the 4.8% plunge off the late-May highs and while further upside potential remains in the near-term, the broader outlook remains heavy for now.” A rebound off confluence support is now poised for a fourth consecutive weekly-advance with the index within striking distance of key resistance at 103.00/49- a region defined by the 2016 high-close, the 2020 high, the January low-week close, the 61.8% Fibonacci retracement and the objective yearly open. Note that the March channel line converges on this threshold over the next few weeks. The focus is on a reaction into this zone IF reached with a breach / close above needed to suggest a larger trend reversal is underway.

Initial support now rests with the July 17^th weekly-reversal close at 101.08 backed by key support at 98.97-99.66- a region defined by the 61.8% retracement of the broader 2021 advance and the 2019 swing high. Losses beyond this threshold would challenge the 2011 slope with the next major lateral support zone eyed at the 61.8% extension of the 2022 decline / 2018 high at 97.25/69

A topside breach / close above this key resistance threshold would be needed to suggest a more significant low was registered last month. Subsequent resistance objectives are eyed at the 2023 high-week close (104.64), the 52-week moving average (currently ~105) and the 38.2% retracement of the 2022 decline / August low-week close at 105.39/67- look for a larger reaction there IF reached.

Bottom line: The US Dollar has rallied from yearly downtrend support with the recovery approaching downtrend resistance. The August opening-range remains intact, and the break should offer some guidance here. From a trading standpoint, look for reduce portions of long-exposure / raise protective stops on a stretch towards the yearly open – losses should be limited to 101.08 IF price is going to attempt a breakout here. I’ll publish an updated US Dollar Short-term Outlook once we get further clarity on the near-term DXY technical trade levels.

Key US Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

• Gold (XAU/USD)
• Euro (EUR/USD)
• Canadian Dollar (USD/CAD)
• British Pound (GBP/USD)
• Australian Dollar (AUD/USD)
• Crude Oil (WTI)

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

Follow Michael on Twitter @MBForex