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USDOLLAR into Resistance- Rally at Risk Sub 11989

USDOLLAR into Resistance- Rally at Risk Sub 11989

Michael Boutros, Strategist
  • USDOLLAR rally approaching near-term resistance objectives
  • Updated targets & invalidation levels
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Chart Created Using FXCM Marketscope 2.0

Technical Outlook: The Dow Jones FXCM U.S. Dollar Index (Ticker:USDOLLAR) is approaching a key near-term resistance zone at basic trendline extending off the 2016 high. Note that this is backed closely by the 50% retracement of the yearly range and the median-line extending off the 4/18 low at 11989. The rally at risk just below this region and we’ll be looking for an exhaustion high to offer a near-term pullback in price. Initial support rests with the lower parallel extending off the 5/11 low with broader bullish invalidation level set to 11830.

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Notes: Momentum divergence into this resistance region leaves the immediate topside bias vulnerable heading into the close of the week. Initial support rests with the lower median-line (blue) of the ascending structure with a break below the weekly opening-range low at 11897 to trigger are larger scale pullback in the greenback. Such a scenario targets support objectives lower at 11855 & 11822/30.

A breach / close above 11989 would be needed to validate the next leg higher targeting the 200-day moving average at 12038 & the key 61.8% retracement of the 2016 range at 12064.Keep in mind we have existing home sales on tap tomorrow with durable goods orders, the second read on 1Q GDP & the personal consumption expenditure (PCE) highlighting the U.S. economic docket next week. Remember that the PCE is the Fed’s preferred gauge of inflation and as such possess more significant event risk for the dollar crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.

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Relevant Data Releases

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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