US Dollar Index (DXY) Technical Outlook: Support Growing in Importance
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USD Index (DXY) Highlights:
- US Dollar Index (DXY) back near trend-line support
- Watch how price action plays out around it
US Dollar Index (DXY) back near trend-line support
The US Dollar Index (DXY) has been chopping around since the late-May, early-June sell-off, leaving traders with limited price action to work with for making decisions. The 2018 trend-line that helped stem the decline is on the verge of being tested once again and the result could prove pivotal.
Hitting the trend-line and bouncing off it again may help further cement a floor that can help lead to another rally. But rallying off support won’t be without its challenges given the generally negative tone in place since topping during the coronavirus panic in March. The June high at 97.80 will need to be crossed along with the trend-line from the March high if the DXY is to gain traction towards the 200-day and beyond.
Should the trend-line break, the confirming factor will be a decline below the June low at 95.72. But it won’t be far below there that a test of a major long-term trend-line from 2014 could unfold. The trend-line also happens to be in very close proximity (~confluence) with the March low at 94.65.
Testing and holding/breaking of that line would be an even more important event than making a move around the 2018 threshold. But before we get to that we need to first focus on the 2018 trend-line as it could shape the near-term trading bias.
US Dollar Index (DXY) Daily Chart (near 2018 trend-line)
U.S. Dollar Currency Index (DXY) Chart by TradingView
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.