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US Dollar Recovery Back at Make-or-Break Resistance – Q3 Top Trading Opportunities

US Dollar Recovery Back at Make-or-Break Resistance – Q3 Top Trading Opportunities

Michael Boutros, Strategist
  • US Dollar Index holds yearly opening-range into Q3 – breakout pending
  • DXY testing critical resistance confluence into July open
  • Constructive above 90.82– breach / close above 93 needed to validate
Top Trading Opportunities in Q4
Top Trading Opportunities in Q4
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DXYWeekly Price Chart

Into the start of Q2 our DXY outlook concluded that, “Bottom line: looking for topside exhaustion early in the quarter to give way to larger pullback.” We got it! The index opened the second quarter on a reversal candle with a one-way route taking the Dollar back into the February lows before rebounding. The immediate focus heading into the Q3 open is on this recent advance into confluence downtrend resistance at 92.28/46- a region define by the 75% parallel (blue), the 2018 yearly open, and the 23.6% Fibonacci retracement of the 2020 decline.

Looking for possible inflection off this zone

A topside breach above exposes the yearly high-week close at 93.01- look for a reaction there IF reached with a break / close above needed to keep the long-bias viable towards the 2016 low-week close at 93.88 and the 38.2% retracement / March low at 94.47/65. Initial support rests with the 61.8% retracement of the yearly range / 2017 low at 80.82-91.01 backed by the yearly open at 89.93- ultimately a break / close below would be needed to mark resumption of the broader downtrend towards the 2018 low-week close / 2021 low at 89.07/20. Bottom line: pullbacks should be limited to 90.82 IF price is heading higher with a breach above the 93-handle needed to suggest a more significant low is in place for the greenback.

Written by Michael Boutros, Technical Strategist

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