Weekly Technical Perspective on the US Dollar (DXY) Ahead of FOMC
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- Updated weekly technicals for US Dollar (DXY)- price reversal testing first support hurdle
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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The US Dollar Index is down more than 3% from the yearly highs with the greenback now testing the first major support hurdle in price. Here are the key targets & invalidation levels that matter on the US Dollar Index (DXY) weekly chart.
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US Dollar Index Weekly Price Chart (DXY)
Notes: Last month we highlighted that the Dollar Index was, “testing confluence slope resistance around 96.50s. Note that this region is defined by the parallel of the 2011 trendline and broader downtrend pitchfork resistance (38.2% line) - the immediate advance may be vulnerable below this region near-term but the focus remains higher while above the 2016 low-week close at 93.89.” Price registered a low at 93.81 this week before rebounding.
The immediate focus remains on confluence support at 93.65/89- note that the 38.2% retracement of the yearly range also converges on the median-line of the multi-year pitchfork we’ve been tracking off the 2015 / 2017 highs. Interim resistance stands with the 200-week moving average at 95.64 with bearish invalidation now set to the high-week close at 96.09. A break lower from here targets 93.19 backed by 92.62/83 (50% retracement / 52-week moving average) and the 2018 open at 92.28.
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Bottom line: The US Dollar tested confluence support this week and could see some sideways to higher price action in the days ahead.Note that a break below the RSI support trigger extending off the yearly lows highlights the risk for further losses. That said, from a trading standpoint, I’m looking for a recovery to fade with a break / close below 93.65 needed fuel the next leg lower in price. Keep in mind that we have the FOMC interest rate decision on tap next week- expect volatility.
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.