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DXY Weekly Price Outlook: Is the Reign of King Dollar Over?

DXY Weekly Price Outlook: Is the Reign of King Dollar Over?

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DXY Weekly Price Outlook: Is the Reign of King Dollar Over?

Is the US Dollar reversal from key uptrend resistance just a pullback or the start of something more ominous? Here are the levels that matter on the DXY weekly chart.

The US Dollar Index is down nearly 0.6% this week with the greenback trading at 97.50 ahead of the New York close on Friday. The recent reversal off long-term trend resistance last week – and drive lower this week - leaves the index vulnerable heading deeper into August trade. These are the updated targets and invalidation levels that matter on the DXY weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this US Dollar price setup and more.

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US Dollar Index Price Chart – DXY Weekly

DXY Weekly Price Chart

Chart Prepared by Michael Boutros, Technical Strategist; DXY on Tradingview

Notes:In my last US Dollar PriceOutlook we highlighted that DXY was approaching long-term uptrend resistance while noting that the, “Index needs to clear this critical resistance slope on a weekly close basis to keep the long-bias viable and validate a breakout of the objective yearly opening-range high.” Price failed to close above this slope last week with DXY falling as low as 1.7% off the highs – the recent move suggests this may be, yet another false break of the long-term resistance slope we’ve been tracking for years now.

Weekly confluence support rests at the 2018 trendline / 61.8% retracement of the January advance at 96.60. Ultimately a break below yearly open support at 96.14 would be needed to suggest a more significant high was registered last week. Look for initial resistance at 97.87 with a breach / close above the 2011 parallel needed to fuel the next leg higher in price towards 99.19.

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

Bottom line:DXY turned from big resistance last week and IF this pullback is the start of a larger correction, look for resistance ahead of 97.87targeting96.60. From a trading standpoint, we’re treating this as a range for now with a break of the 96.60-98.42 zone ultimately to offer broader guidance on our medium-term directional bias.

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Previous Weekly Technical Charts

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

Follow Michael on Twitter @MBForex

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