US Dollar Technical Outlook: This Week Could Be Important for the DXY
US Dollar Technical Outlook:
- US Dollar Index (DXY) very near the September low
- Long-term crossroad of support, make or break?
- A breakdown is seen as having the most potential for a powerful move
The US Dollar Index (DXY) is trading very near the 91.74 low created back on September 1, which could be a significant make or break spot for the index. The crossroad of support created by a level from 1998 and the trend-line from 2011 suggests a big move may be in the cards.
At this juncture, given the generally weak trend and long-term nature of support, a breakdown is seen as holding more potential for a powerful move, than a hold and reversal to the upside is. A drop below 91.74 on a weekly basis could clear a path towards the 2018 low at 88.25.
It is possible this turns out to be one final strong move lower in 2020, but if support holds then risk leans more towards seeing a range continue to develop. A bounce may still indeed be vigorous, but with the general tone in the dollar weak without being significantly oversold, markets conditions generally lean towards it taking time to rebuild confidence on the top-side, and thus any kind of real momentum.
All-in-all, the US Dollar Index may be on the verge of making one final move in 2020, and even though that move looks likley to be on the downside at the moment, it is still prudent to respect support until it is broken below 91.74.
US Dollar Index (DXY) Weekly Chart (big support may finally break)
US Dollar Index (DXY) Daily Chart (trend/tone weak into support)
Resources for Forex Traders
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
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.