US Dollar Technical Forecast: USD Bulls Exhaust into Resistance

US Dollar Index Technical Forecast: DXY Weekly Trade Levels

• US Dollar rally extends nearly 3.9% off yearly lows- NFPs on tap
• USD three-week rally faltering at yearly high-week close- risk for near-term exhaustion
• DXY resistance 104.63, 105.68-106.15 (critical)– support 103.49, 102.99, 101.70s

The US Dollar is poised to snap a three-week winnings streak with the DXY stalling into technical resistance this week. While the medium-term outlook remains constructive, the threat for a larger pullback rises while below yesterday’s high. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart heading into June.

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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 the DXY had, “been resting on support for the past five weeks and the focus is on a breakout of this near-term range. From a trading standpoint, the broader bearish outlook remains vulnerable while above 101.30- bears on notice.” The index broke higher days later with a three-week rally extending more than 3.8% off the lows. The advance is responding to confluent resistance this week at the yearly high-week close around 104.63 (high registered at 104.70)- risk for some exhaustion here.

Initial support is eyed at the objective yearly open at 103.49 backed closely by a major pivot zone at the 2016 high-close / 2020 swing high / January low-week close at 103- a close below this threshold would threaten a larger correction towards slope support (currently near ~101.70s).

A topside breach / weekly close above 104.63 is needed to fuel the next leg higher with critical resistance eyed around the yearly highs at 105.67-106.15- a region defined by the 52-week moving average, the August low-week close and the 38.2% Fibonacci retracement of the 2022 decline. Look for a larger reaction there IF reached.

Bottom line: The US Dollar rebound may be vulnerable here just below the yearly high-week close. From at trading standpoint, losses should be limited to 103 IF price is heading higher on this stretch with a close above this week’s high needed to mark uptrend resumption towards the yearly opening-rang highs. Keep in mind we in the early throws of June trade with US Non-Farm Payrolls on tap tomorrow- stay nimble here and watch the weekly close. 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 Twitter @MBForex