US Dollar short-term price outlook: DXY looks for a low

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

US Dollar Index breaks February uptrend- threatens deeper correction
USD bulls searching for a low in the days ahead
DXY resistance 104.66, 105.26, 105.73-106.15 (key)– support 104.15, 103.82, 103.49/62 (critical)

The US Dollar Index is down nearly 0.7% since the start of the week with the DXY threatening a break of the February uptrend. That said, signs of exhaustion have already emerged and we’re on the lookout for a possible exhaustion low int the day ahead. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart.

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: DXY has been trading within the confines of an ascending channel formation extending off the February low. While a break below the lower parallel does threaten a deeper pullback, an outside-day reversal today would suggest the risk for some near-term exhaustion here. We’re looking for validate a low in the days ahead.

US Dollar Index Price Chart – DXY 240min

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

Notes: A closer look at USD price action shows DXY breaking below the weekly opening-range lows / channel support today before rebounding off the 100% extension of the weekly decline at 104.15 (two equal legs off the high). IF this correction is over, losses should be limited by today’s low.

Initial resistance is eyed at 104.67 backed by the objective weekly open at 105.26. Ultimately a breach / close above key resistance at 105.73-106.15 is needed to mark resumption. This region is defined by the 100% extension of the February advance and the 38.2% retracement of the late-September sell-off.

A break lower from here exposes the 2017 swing high at 103.82 backed by key support at the objective yearly open / 38.2% retracement at 103.49/62 – both regions of interest for possible downside exhaustion IF reached.

Bottom line: The US Dollar has broken short-term trend support – we’re looking for evidence of an exhaustion low in the days ahead with a breach / close above 106.15 needed to fuel the next leg higher in price. Losses should be limited to the yearly open at 103.50 for the February breakout to remain viable.

Review my latest US Dollar weekly technical forecast for a longer-term look at the DXY trade levels.

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

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