US Dollar Price Outlook: USD Testing Uptrend Support into 2020 Open
- US Dollar plunges into slope support- bearish invalidation lowered go 97.87
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The US Dollar plummeted more than 3.3% off the September highs before stabilizing this week with the DXY responding to long-term trend support into the open of 2020 trade. The greenback opens the year on the back of the tightest yearly-range since 1996 and IF last year’s third quarter reversal was as significant as the technicals suggest, the dollar is likely to get some serious play in the months ahead. These are the updated targets and invalidation levels that matter on the DXY weekly price chart.
US Dollar Price Chart – DXY Weekly
Notes: In my last US Dollar Weekly Price Outlook we noted that DXY had turned just ahead of major technical resistance and to, “be on the lookout for possible topside exhaustion up here. . We’ll be looking for a reaction into the start of the month (December) for guidance with the October advance at risk while below 98.84.” Price registered a high at 98.38 last month before turning lower with the index closing 2019 at fresh five-month lows.
The decline puts the Dollar at uptrend support into the January open with the index testing a sliding parallel extending off the June 2018 lows. While the medium-term outlook remains weighted to the downside, the immediate decline may be vulnerable while above this slope into the start of the year. Initial weekly resistance eyed at 97.17 with bearish invalidation now lowered to the 61.8% retracement at 97.87. A break lower from here eyes subsequent support objectives at the 2019 yearly open / 100% extension at 95.98-96.14 backed the low-week close at 95.66 and the 2019 low /descending channel support at 95.03.
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Bottom line: The US Dollar is testing multi-year uptrend support into the open of 2020 trade. From a trading standpoint, we’re looking for possible topside exhaustion on an early-month recovery – ultimately targeting a break lower towards the 96-handle and beyond. I’ll publish an updated US Dollar Price Outlook once we get further clarity on near-term DXY technical trade levels.
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.