US Dollar technical forecast: USD bulls eye resistance

US Dollar Index technical forecast: DXY weekly trade levels

• US Dollar Index marks fourth-consecutive weekly advance
• USD monthly reversal off key support now approaching critical resistance
• DXY resistance 105.73-106.15 (key), 108.09, 109.45– support 103, 1.1632/44 (key),

The US Dollar Index charged higher into the close of the week with DXY marking its fourth-weekly advance. The rally comes off an early-month reversal from key support with the index now approaching a critical technical confluence- bulls on notice. 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 Weekly

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

Technical Outlook: The US Dollar Index posted an outside-weekly reversal off confluent support into the start of February with the index rallying more than 4.4% off the lows. While a breach above the 52-week moving average / 1999 highs does keep the risk weighted to the topside, the advance may be vulnerable heading into downtrend resistance (blue).

The zone in focus is eyed at 105.73-106.15 – a region defined by the 100% extension of the monthly advance, the December / January swing highs and the 38.2% Fibonacci retracement of the September decline. A topside breach / weekly close above this threshold is needed to mark resumption towards subsequent resistance objective at the 2001 low at 108.09 and the 61.8% retracement at 109.45.

Initial weekly support rests with the objective yearly-open at 103.49 backed by the 2016 high-close / 2023 low-week close at 103- losses should be limited to this threshold IF the Dollar is going to attempt a breakout of the multi-month downtrend. A pivot below this level would threaten another test of broader uptrend support, currently near ~101.40s.

Bottom line: The US Dollar rebound may be vulnerable in the days ahead as the index approaches a major pivot zone. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a rally towards 106 – losses should be limited by the yearly open IF price is heading higher on this stretch. I’ll publish an updated US Dollar short-term outlook once we get further clarity on the near-term DXY technical trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

• British Pound (GBP/USD)
• Australian Dollar (AUD/USD)
• Japanese Yen (USD/JPY)
• Canadian Dollar (USD/CAD)
• Euro (EUR/USD)
• Gold (XAU/USD)

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

Follow Michael on Twitter @MBForex