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US Dollar Technical Forecast for the Week Ahead

US Dollar Technical Forecast for the Week Ahead

Paul Robinson, Strategist

USD Technical Outlook: Neutral

  • US Dollar Index (DXY) broke support with very strong momentum
  • Support down under 10500 could be next up for the index
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US Dollar Technical Forecast for the Week Ahead

The US Dollar Index (DXY) broke hard on Thursday on better-than-expected CPI data, and on that it took out important support. The downward momentum to end last week will likely carry on into at least the early part of next week.

Looking lower there is support at the rising 200-day MA just under 10500, and in near confluence is price support from a high and low created during May and August, respectively. With price plunging sharply into that area it could create a sharp snapback as the dollar becomes near-term oversold.

If we see an early week bounce there could be some initial resistance around 10770 that keeps the upside in check. A bounce into resistance could set-up another trade lower to the aforementioned support levels.

All-in-all, volatility is expected to remain high and likely to create some two-way trading opportunities for the nimble.

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US Dollar (DXY) Daily Chart

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US Dollar Index (DXY) Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.