US Dollar Outlook: DXY Plunges into May - USD in Free-Fall Post-NFP

2021-05-09 09:00:00

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US Dollar Technical Price Outlook: DXY Weekly Trade Levels
US Dollar Index Price Chart – DXY Weekly
Key US Data Releases
Previous Weekly Technical Charts

US Dollar Technical Price Outlook: DXY Weekly Trade Levels

US Dollar technical trade level update – Weekly Chart
USD breakdown plummets into yearly trend support- risk for further May losses
DXY weekly support at 89.93, 89.07 - resistance / bearish invalidation 92.28

The US Dollar Index plummeted more than 1% this week with DXY breaking to multi-month lows on the heels of a weaker-than-expected April Non-Farm Payroll report. The decline marked an outside-weekly reversal candle on Friday with the index now down more than 3.4% off the yearly high. While the breakdown does risk further Dollar losses, the immediate focus is on resumption below yearly trend support heading into next week with the outlook weighted to the downside while below this week’s high. These are the updated technical targets and invalidation levels that matter on the US Dollar Index price chart heading into next week. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.

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US Dollar Index Price Chart – DXY Weekly

Chart Prepared by Michael Boutros, Technical Strategist; US Dollar Index on Tradingview

Notes: In my last US Dollar Weekly Price Outlook we noted that the DXY was, “in correction within the yearly uptrend with the decline now eyeing initial support objectives just lower.” The zone in focus was 90.82–91.01 – a region defined by the 61.8% retracement of the yearly range and the 2017 swing low. The index carved a weekly opening-range just above this threshold before breaking sharply lower post-NFP on Friday. The decline marked an outside-weekly reversal into yearly trendline support with a close below needed to keep the immediate short-bias viable.

A break lower keeps the focus on the objective 2021 yearly open at 89.83 backed by the 2018 low-week / yearly low at 89.07/20- look for a larger reaction there IF reached. Initial weekly resistance stands with the May open at 91.30 with broader bearish invalidation now lowered to the 2018 yearly open at 92.28.

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

Bottom line: The US Dollar has broken to multi-month lows with the index threatening a break of yearly slope support. From at trading standpoint, look to reduce short-exposure / lower protective stops on a test of the yearly open – rallies should be capped by this week’s high IF price is indeed heading lower. I’ll publish an updated US Dollar Price Outlook once we get further clarity on the near-term technical DXY trading levels.