US Dollar Technical Forecast: USD Set for Break in Q3

US Dollar Index Technical Forecast: DXY Weekly Trade Levels

• US Dollar trades back into objective yearly open
• USD consolidation within 2023 opening-range poised for breakout into Q3
• DXY resistance 103.00/49, 104, 104.63– support 101.90s, 101.29 (critical), 100

The US Dollar is virtually unchanged this week as the recent recovery faltered into a major pivot zone around the 2023 yearly open. The outlook heading into July now hinges on a breakout of the yearly consolidation pattern and battle-lines are clear heading into Q3. These are the updated targets and invalidation levels that matter on the DXY weekly technical chart.

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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 my last US Dollar Index Technical Forecast we noted that the DXY, “rebound may be vulnerable here just below the yearly high-week close.” The Dollar registered an intraweek high just pips above 104.63 before plunging more than 2.6% with the index paring a portion of that decline for the past two-weeks.

Despite a yearly trading range of more than 4.8%, DXY is now trading within 0.5% of the yearly open as price continues to contract within the objective 2023 opening-range. Heading into Q3, the focus is on a breakout of this consolidation formation just above broader uptrend support.

Initial resistance steady at 103.49 backed by the March consolidation slope (currently ~104). Ultimately a breach / close above the high-week close at 104.63 is needed to fuel an attempt on key resistance at 105.56-106.15- 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.

Initial slope support rests near 101.90s with a weekly close below the 2022 May lows at 101.29 needed to validate a breakout of the objective yearly opening-range. Such a scenario would threaten a bout of accelerated losses towards 100 and the 61.8% Fibonacci retracement of the 2021 advance at 98.98.

Bottom line: The US Dollar is poised for a breakout of the yearly consolidation range heading into July / Q3 open. From a trading standpoint, losses should be limited to 102 IF price is heading higher on this stretch with a close above 104.63 needed to validate a breakout. Stay nimble into the start of the month with a shortened holiday-week culminating on Friday with the release of US Non-Farm Payrolls- expect some volatility here. 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

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