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US Dollar Technical Forecast: USD Breakout Rips to Fresh 2021 Highs

US Dollar Technical Forecast: USD Breakout Rips to Fresh 2021 Highs

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US Dollar Technical Price Outlook: Bullish

  • US Dollar technical trade level update – Weekly Chart
  • USD breakout rips to fresh yearly highs – pivot above multi-year slope
  • DXYsupport 94.47, 94.13, 93.81(bullish invalidation) – Resistance 95.15, 96.10/50 (key)

The US Dollar Index rallied for a third consecutive week with a major breakout fueling a rally of more than 1% ahead of the New York close on Friday. While the breakout to fresh yearly highs does keep the broader focus higher, the advance has already stretched into initial resistance targets and may limit the immediate thrust in the days ahead. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.

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 DXY had been testing a major resistance zone for weeks at, 94.47/65- a region define by the 38.2% Fibonacci retracement of the 2020 decline and the March 2020 low. We warned that, “A topside breach / close above this resistance range is needed to keep the long-bias viable with such a scenario exposing the November 2017 high at 95.15 and critical resistance at the 50% retracement / 2020 yearly open at 96.10/50.” A topside breach on November 10th fueled a rally of more than 1.5% off the monthly lows with price now probing the 95.15 resistance zone into the close of the week. Note that weekly momentum (RSI) has now stretched into its highest reading since August of 2018 and further highlights the significance of this technical breakout.

Initial weekly support now rests back at 94.47/65 backed by the monthly open at 94.13- broader bullish invalidation now raised to the November opening-range low at 93.81. A weekly close above 95.15 is needed to mark resumption towards the median-line (currently ~95.70s) and critical resistance at 96.10/50- area of interest for possible topside exhaustion IF reached.

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 breakout has extended into initial resistance objectives – the trade remains constrictive while within this formation. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops- pullbacks should be limited the monthly open IF price is indeed heading higher on this stretch. I’ll publish and updated US Dollar Price Outlook once we get further clarity on the near-term technical trade levels.

USD Forecast
USD Forecast
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Key US Data Releases

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Previous Weekly Technical Charts

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

Follow Michael on Twitter @MBForex

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