Never miss a story from Paul Robinson

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Paul Robinson

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

USD Technical Highlights:

  • US Dollar Index (DXY) flirting with major support break
  • Breakout of wedge pattern could soon be in play
  • Euro will be the primary driver here given its weighting

To see what fundamental drivers and technical signposts DailyFX analysts are watching, check out the Q2 forecasts for various markets on the DailyFX Trading Guides page.

US Dollar Index (DXY) flirting with major support break

A couple of weeks back the US Dollar Index (DXY) bounced off confluent support arriving by way of the trend-line (underside of longer-term wedge) and the 200-day. The bounce looked sustainable up to at least the old highs in the low-98s, but since the Fed meeting the other day we’ve seen aggressive selling that has support just about broken, again.

‘Teetering’ on support is how I would describe this. Looks like it is about to break and in fact is sneaking every so slightly under the trend-line already, but still price hasn’t fully cleared all levels. To get a confirmed break a move through 96.46 on a closing daily basis is needed, weekly basis even better.

A confirmed break will have a wedge formation in play as well and this could lead to the DXY testing downside levels in aggressive fashion in the weeks ahead. It would be a welcomed event as pent up pressure has led to increasingly choppy trading conditions. Something looks set to give at some point soon…

However, a failure to sustain under support may lead to a rally, so the key here is to wait for a confirmed break. A hold of support won’t turn the Dollar bullish, but it does at least keep it neutral with shorts still lacking the proper set of conditions needed to get aggressive. Would-be longs can continue to use support as a line-in-the-sand for however long it lasts.

US Dollar Index (DXY) Weekly Chart (wedge)

US Dollar Price on the Brink of Support Break: DXY, Euro Charts

US Dollar Index (DXY) Daily Chart (teetering on support)

US Dollar Price on the Brink of Support Break: DXY, Euro Charts

Euro will be the primary driver here given its weighting

The Euro being 57% of the DXY index means it will be the primary driver. It, like the Dollar Index, has a similar chart pattern, but pointing in the opposite direction. A break above confluent resistance (close above 11352) should have EURUSD running higher. But resistance is resistance until it’s not, so still a little work to do.

EURUSD Weekly Chart (falling wedge)

US Dollar Price on the Brink of Support Break: DXY, Euro Charts

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX