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US Dollar Technical Forecast: USD Rips into October- Bulls Eye NFP

Article By: ,  Sr. Technical Strategist
October 3, 2024 10:45 PM

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

  • US Dollar rebounds off key technical support- poised to snap four-week losing streak
  • USD four-day rally extends into initial resistance- risk for exhaustion / inflection into NFP
  • DXY resistance ~102, 102.58/99 (key), 103.85-104.08– Support 101.41, 100.41 (key), 98.97-99.66

The US Dollar responded to critical technical support this week with the DXY up more than 1.9% off the yearly lows. A four-day rally takes USD back above the 2024 yearly open with the index now testing initial resistance ahead of tomorrow’s US labor report. The battle lines are drawn heading into the October open-range. 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 had, “plunged into technical confluence zone at multi-year upslope / multi-month downtrend support – risk for downside exhaustion / price inflection into this zone. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops…” We specifically highlighted confluence zone around ~100.30/61 as a critical barrier for the index- the Dollar briefly registered an intraweek low at 100.15 with the weekly close-low holding at 100.41.

The DXY has rallied more than 1.9% off those lows with the index now testing parallel resistance extending off the 2023 lows (currently near ~102) ahead of tomorrow highly anticipated Non-Farm Payrolls report. We’re looking for possible inflection off this zone with the immediate rally vulnerable while below.

Yearly-open support rests at 101.41 with key support now set to the 2024 low-close at 100.41. Ultimately, a break below pitchfork support (blue) would be needed to mark downtrend resumption with such a scenario likely to fuel another accelerated bout of losses towards the 2019 high at 99.66 and the 61.8% retracement of the broader 2021 advance at 98.97- both levels of interest for possible downside exhaustion / price inflection IF reached.

A pivot above this slope (red) would expose a key pivot zone a 102.59/99- a region defined by the 38.2% retracement of the yearly range and the 2016 high-close. Note that the median-line converges on this threshold over the next few weeks and a breach / close above would be needed to suggest a more significant low was registered last week / a larger reversal is underway. Subsequent topside objective eyed with the 52-week moving average / 61.8% retracement at 103.85-104.08- look for a larger reaction there IF reached.

Bottom line: The US Dollar has responded to the 2011 support slope with the recovery now testing initial resistance at the 2023 parallel- the focus is on a breakout of this week’s range for guidance. From a trading standpoint, losses should be limited to the yearly-open IF price is heading higher on this stretch with a pivot / weekly close above this slope needed to keep the recovery viable.  

Keep in mind we are in the early throws of the October / Q4 opening-ranges with US Non-Farm Payrolls (NFPs) on tap tomorrow. Stay nimble into the release and watch the weekly closes for guidance 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

Follow Michael on X @MBForex

 

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