US Dollar Technical Forecast: USD Battles Lines for August Breakout

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

• US Dollar plunges 2.14% off July high, slips back below 52-week moving average
• USD poised to carve August opening-range just above support - NFPs on tap
• DXY resistance 104.82-105.18, 106.10/11 (key), 107.18– Support 103.60, 102.87/99 (key), 101.33

The US Dollar is virtually unchanged this week with the index trading just above confluent support into the August open. A well-defined technical range is in view and we’re looking for a breakout to offer further guidance in the days ahead. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart.

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US Dollar Price Chart – USD Weekly (DXY)

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

Technical Outlook: In last month’s US Dollar Technical Forecast we noted that DXY had been testing lateral resistance or nearly two-weeks, “at the 2023 / 2024 high-week closes (HWC) at 106.10/11- the focus is on possible inflection off this threshold with the long-bias vulnerable while below.” The index turned sharply lower days later with the DXY plunging more than 2.3% off the off the July highs to mark a weekly close below the 52-week moving average.

The USD rebounded off the 100% extension off the April decline at 103.60 with the index ranging just above this level for the past three weeks. Initial resistance is eyed at 104.42-105.18-  a region defined by the July high-day reversal close and the 61.8% Fibonacci retracement of the most recent decline. A breach / weekly close above this threshold would shift the focus towards another test of key resistance / bearish invalidation at 106.10/11 - look for a larger reaction there IF reached.

A break below the 103.60 support pivot still must contend with a major technical confluence at 102.87/99- a region defined by the 61.8% retracement of the December rally, the 2016 high-close (HC) and the January 2023 low-week close (LWC). A break / weekly close below this threshold would risk significant losses for the Dollar with subsequent support objectives eyed at the 2023 trendline (currently ~101.80s) and the December LWC / 2024 yearly open at 101.33/41.

Bottom line: The US Dollar index is trading just above confluent support with the August opening-range taking shape within well-defined technical barriers. From at trading standpoint, the immediate focus is on a breakout of the 103.60-105.18 range for guidance with the broader April decline vulnerable while above the July low.

Keep in mind we get the release of US Non-Farm Payrolls into the close of the week- stay nimble into the August opening-range and watch the weekly closes here for guidance. Review my latest US Dollar Short-term Outlook for a closer look at the near-term DXY technical trade levels.

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

Follow Michael on X @MBForex