US Dollar Technical Forecast: USD Trump Rally Breaks Yearly Range

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

US Dollar Trump rally charges breakout of 2023 consolidation pattern
USD breakout of yearly opening-range now approaching initial resistance hurdles
DXY resistance 107.35, 107.93-108.06, 108.98 (key)– Support 106.04/11, ~105.50s, 104.87/97 (key)

The US Dollar marked the largest single-week advance since September (the week after the yearly lows registered) with the DXY rally breaking to a fresh yearly high last week. The advance has extended 6.9% off the yearly lows while the medium-term outlook remains constructive, the index may be vulnerable in the near-term as the bulls approach initial resistance objectives. 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 my last US Dollar Technical Forecast we noted that DXY rally may be vulnerable into confluent resistance at the July high-week close (HWC) / February high at 104.95/97- “losses should be limited to the yearly moving average IF the USD is heading higher on this stretch with a close above 105 needed to fuel the next leg in price.” The index broke higher the following week with breakout of the 2023 consolidation pattern taking DXY to fresh yearly highs. Note that weekly momentum has risen to the highest levels of the year and further supports the notion of a larger shift in trend here. A newly identified ascending pitchfork extending off the December / September lows keeps the outlook weighted to the topside while above the median-line.

Initial weekly resistance is eyed at the 2023 swing high near 107.35 with more significant technical confluences eyed at the 100% extension of the 2023 advance / 2022 July HWC at 107.93-108.06 and the 61.8% Fibonacci retracement of the 2022 decline at 108.98. Both levels represent areas of interest for possible topside exhaustion / price inflection IF reached.

Weekly support rests with the 2023 / April HWCs at 106.04/11 and is backed by the highlighted slope confluence near ~105.50s. Medium-term bullish invalidation is now raised to the July HWC / February high at 104.87/97- losses below this threshold would suggest a more significant high was registered last week and would threaten a larger trend reversal.

Bottom line: The US Dollar has broken out of the yearly opening-range as well as the 2023 consolidation pattern and keeps the broader technical outlook weighted to the topside. That said, the index has now rallied six of the past seven weeks (one weekly Doji) and the near-term rally may be a bit extended here.

From a trading standpoint, losses should be limited to the median-line IF price is heading higher on this stretch with a breach / close above 107.35 needed to fuel the next leg of the advance. Keep in mind we have key US inflation data on tap next week into the close of the month- stay nimble into the releases and watch the weekly closes here for guidance. Review my latest US Dollar Short-term Outlook for 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

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.