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US Dollar Technical Forecast: DXY Exhausts into 19-Year Highs

US Dollar Technical Forecast: DXY Exhausts into 19-Year Highs

Michael Boutros,
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US Dollar Technical Price Outlook: DXY Weekly Trade Levels

  • US Dollar technical trade level update – Weekly Chart
  • USD breakout extends for a fourth week to fresh multi-yearly highs– exhaustion risk near-term
  • DXY support 101.79, 101.04 (key) – Resistance 103.82, 104.20 104.88 (critical)

The US Dollar Index surged more than 2% this week with a fourth consecutive weekly rally taking DXY into fresh multi-year highs. While the broader outlook for the greenback remains constructive, the advance may be reaching a state of near-term exhaustion and we’re on the lookout for possible sideways-to-lower price action heading into the May open. 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 thisDXY 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 the DXY, “breakout has extended to fresh yearly highs and a weekly close above 100 is needed to keep the immediate advance viable.” We got the weekly close and resumption with the index ripping to fresh multi-year highs not seen since 2002 before pulling back into the close of the week. Is this rally sustainable into the May open?

A close this week below the 2020 highs / 2016 high close at 103 may be the tell. Extremes in both sentiment, momentum, and price warn of some exhaustion here and while the broader focus does remain higher, the immediate advance may be vulnerable in the weeks ahead. Initial weekly support now rests with the 2020 high-week close / 61.8% Fibonacci retracement of the 2001 decline at 101.79/94 with a break below this week’s low (101.04) needed to suggest a more significant high is in place. Weekly resistance steady at the 2017 highs at 103.82 backed by the parallel in red (currently ~104.20s) and the 1999 swing high at 104.88- look for a larger reaction there 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 rally exhausted into resistance at the 2017 swing highs on the heels of a 5.4% rally in just four weeks– look for consolidation here into the May open. From at trading standpoint, a good zone o reduce long-exposure / raise protective stops – losses should be limited to 101.79 IF price is heading higher on this stretch with a topside breach / close above 103.82 needed to mark resumption of the broader uptrend. Keep in mind we’re heading into the monthly opening-range next week with the FOMC interest rate decision and US Non-Farm Payrolls (NFP) on tap- stay nimble here. I’ll publish and updated US Dollar Price Outlook once we get further clarity on the near-term DXY technical trade levels.

USD Forecast
USD Forecast
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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.