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The US Dollar Index is down more early 1% since the start of the week with price threatening a break of the monthly opening-range lows on Friday. These are the updated targets and invalidation levels that matter on the DXY weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this US Dollar setup and more.

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US Dollar Index Price Chart - DXY Weekly

US Dollar Index Price Chart - DXY Weekly - USD Technical Outlook

Notes: In my last US Dollar Weekly Price Outlook we noted that, “A reversal in the US Dollar Index has taken price back towards multi-month slope support – watch the weekly close. A break lower would expose key confluence support at 96.14- look for a bigger reaction there IF reached.” The index is poised to mark an outside-weekly reversal this week with price turning just ahead of the June highs to cover the entire monthly range.

The move leaves the risk weighted to the downside heading into next week with a close below the September support slope (blue) needed to keep the immediate short-bias viable. Key support remains at the confluence of the yearly open and the 2018 trendline (red) at 96.14- a break / close below this threshold is needed to suggest a larger reversal is underway in the greenback with such a scenario targeting the 2019 low-week close at 95.66 and the yearly swing low at 95.03. Initial resistance steady at the 61.8% retracement of the 2017 decline at 97.87 with bearish invalidation now lowered to the yearly swing high at 98.37.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: An outside-weekly reversal in the US Dollar Index leaves the risk weighted to the downside in the greenback. That said, look for a weekly close below the September trendline to validate the break targeting yearly open support. From a trading standpoint, the focus is on a test of confluence support lower down near 96.14- look for a reaction there. I’ll publish an updated DXY scalp setup once we get further clarity in near-term price action.

Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading

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Key US Data Releases

US Key Data Releases - Econmic Calendar

Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Previous Weekly Technical Charts

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

Follow Michael on Twitter @MBForex