Dollar Price Outlook: USD Technical Breakdown at Yearly Open Support

2020-06-05 15:30:00

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US Dollar Technical Price Outlook: DXY Near-term Trade Levels
US Dollar Index Price Chart – DXY Daily
US Dollar Index Price Chart – DXY 120min
Key US Data Releases
Active Trade Setups

US Dollar Technical Price Outlook: DXY Near-term Trade Levels

US Dollar technical trade level update – Daily & 120min Charts
DXY marks eight-day decline into yearly open support at 96.50
Key resistance 97.87 – break below 96.21 needed to fuel next leg

The US Dollar plunged more than 3% on an eight-day decline with the index now down more than 6% from the yearly highs. Price is testing a major support confluence into the close of the week and the focus is on a reaction just lower for guidance. These are the updated technical targets and invalidation levels that matter on the US Dollar Index (DXY) weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this US Dollar trade setups and more.

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US Dollar Index Price Chart – DXY Daily

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

Technical Outlook: In my last US Dollar Weekly Price Outlook we noted that the, “The Dollar Index has broken below a multi-week consolidation / the May opening-range lows and keeps the focus lower heading into June.” The greenback is down more than 1.3% this week as the decline took another leg lower with DXY testing confluence support into the close on Friday.

The zone in focus is 96.44/50- a region defined by the objective yearly open & the 78.6% Fibonacci retracement of the March advance and converges on basic parallel support. The 100% extension of the broader decline rests just lower at 96.21 and a break / close below this threshold is needed to keep the immediate short-bias viable towards the 2019 low-day close at 95.55.

US Dollar Index Price Chart – DXY 120min

Notes: A closer look at Dollar price action shows DXY trading within the confines of a descending pitchfork formation extending off the May highs with the lower parallel further highlighting the 96.44/50 support zone. Initial resistance now at the median-line / November lows at 97.11 with near-term bearish invalidation now lowered to the 2018 high / 61.8% retracement at 97.71/87- a breach / close above this threshold would be needed to shift the focus back to the long-side in the Dollar.

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 breakdown has taken the index into confluence support at the objective yearly open. From at trading standpoint, a good spot to reduce short-exposure / lower protective stops. Be on the lookout for topside exhaustion ahead of 97.87 IF price is indeed heading lower with a close below 96.21 needed to mark resumption. Keep in mind we have the FOMC interest rate decision on tap next week – stay nimble.