US Dollar Technical Forecast: USD Slows at December Lows

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

US Dollar defends December low for third week– price straddling 2024 yearly open
USD September opening-range taking shape just above support- CPI on tap
DXY resistance ~102, 102.80/99 (key), 104.22– Support 100.61, ~100.20s, 98.97-99.66 (key)

The US Dollar is off 0.46% this week with DXY poised to close just below the objective 2024 yearly open. The index looks to have carved the September opening-range lows just above support at the December / August swing lows and the battle lines are drawn heading into key inflation data next week. 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 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 was, “threatening a break below multi-year trend support. From a trading standpoint, look to reduce short-exposure / lower protective stops on a drop towards the yearly open- rallies should be limited to 102.91 IF price is heading lower on this stretch with a close below 101.33 needed to fuel the next major leg.” The index plunged through support that week with the decline registering an intraweek low at 100.51 before rebounding off channel support / the December sing low. Price has been straddling the yearly open at for the past three-weeks and the focus now turns to a breakout of the September opening-range for guidance.

Initial resistance is eyed along the parallel extending off the 2023 lows (currently ~102) with bearish invalidation steady at 102.80/99- a region defined by the 38.2% retracement of the April decline, the 2016 high-close, and the January 2023 low-week close (LWC). A close above this threshold would be needed to suggest a more significant low is in place – subsequent resistance eyed at the 52-week moving average / 61.8% Fibonacci retracement at 104.22.

A break / close below the December low at 100.61 is needed to mark downtrend resumption towards the 2011 original slope (currently near ~100.20s) and key technical support at 98.97-99.67- a region defined by the 61.8% retracement of the 2021 rally, the 2023 swing low, and the 2019 swing high. Both regions represent levels of longer-term support and are areas of interest for possible downside exhaustion IF reached.

Bottom line: The US Dollar index halted its decline at confluent downtrend support around the December low with the September opening-range taking shape just above. From a trading standpoint, the threat remains weighted to the downside while below 102.99 with a break of the monthly lows needed to fuel a test of longer-term slope support.

Keep in mind we get the release of key US inflation data next week with the August Consumer Price Index (CPI) on tap Wednesday. The immediate focus is on a breakout of the monthly opening-range- stay nimble into the release and watch the weekly closes here. Review my latest US Dollar Short-term Outlook for a closer look at the near-term DXY technical trade levels.

Key Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

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

Follow Michael on X @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.