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US Dollar Technical Forecast: USD Rips Towards Uptrend Resistance

US Dollar Technical Forecast: USD Rips Towards Uptrend Resistance

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

  • US Dollar technical trade level update – Weekly Chart
  • USD rallies towards uptrend resistance at fresh yearly- risk for price inflection ahead
  • DXY weekly support 108.09, 105.67, 104.88 (key) – Resistance 110.25 (key), 111.31, 112.94

The US Dollar Index rallied more than 0.7% this week with DXY stretching to fresh yearly highs on a third consecutive weekly advance. While the broader technical outlook remains constructive for the greenback, the advance is now approaching uptrend resistance early in the month and the threat rises for possible price inflection just higher. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart heading into September trade. 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 last month’s US Dollar Weekly Price Outlook we noted that DXY was approaching resistance at the 2001 low at 108.09 while highlighting the, “Risk for inflection into this region with a weekly close above needed to keep the immediate advance viable in the days ahead towards the yearly highs at 109.29 and the 78.6% retracement of the 2001 decline at 110.25.” The Dollar ripped through resistance mid-month with the rally taking a leg higher into the September open to register a high this week at 109.97. While the broader outlook remains constructive, we continue to note ongoing momentum divergence with price now within striking distance of confluent resistance at 110.25- risk for possible price inflection into this zone.

A topside breach / close above would likely fuel another accelerated rally with such a scenario exposing subsequent resistance objectives at 111.31 and the September 2001 low-week close at 112.94. Initial support now back at 108.09 backed by the August low-week close at 105.67. Broader bullish invalidation now raised to the 1999 high at 104.88.

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 is now approaching uptrend resistance just higher. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 110.25– losses should be limited to 108 IF price is indeed heading higher on this advance. Keep in mind we’re just setting the September opening-range with broader market participation to return after the extended holiday break- stay nimble here. I’ll publish an updated US Dollar Short-term Price Outlook once we get further clarity on the near-term XAU/USD technical trade levels.

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--- 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.