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US Dollar Outlook: USD Price Collapse Stretches Into Weekly Open

US Dollar Outlook: USD Price Collapse Stretches Into Weekly Open

Michael Boutros, Strategist

US Dollar Technical Price Outlook: DXY Weekly Trade Levels

  • US Dollartechnical trade level update – Weekly Chart
  • USD Breaks multi-year uptrend support – risk for further losses into year-end
  • DXY at risk for sharp declines sub-92.28- Initial weekly into 89.90s
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The US Dollar Index has plummeted more than 4% off the September highs with the sell-off breaking below major multi-year uptrend support last week - the technical implications of this break are massive and suggest a significant shift in the longer-term USD price outlook. That said, the decline looks stretched into the weekly open and the risk for near-term exhaustion rises on a test of parallel support just lower. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.

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US Dollar Index Price Chart – DXY Weekly

US Dollar Index Price Chart - DXY Weekly - USD Trade Outlook - Technical Forecast

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, “attempting to break / close below critical support zone at multi-year uptrend support – risk for accelerated losses while below 92.28.” The index spent more than two weeks attempting to break this level before crashing lower into the close of November with the Dollar plummeting another 1.2% into the start of December trade.

Initial support rests with the slope parallel extending off the June 2019 low backed closely by the 88.6% Fibonacci retracement of the 2018 advance at 89.93- look for inflection there IF reached with a break / close below needed to keep the focus on subsequent objectives at the 2010 high at 88.71 & 88.18. Initial resistance now at 91.92-92.28 backed by the highlighted trendline confluence near 92.75 and 93.30s– a breach / close above this threshold would be needed to shift the broader focus higher again in the greenback.

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 has broken major uptrend support and keeps the outlook weighted to the downside heading into the close of the year. From a trading standpoint, the immediate decline may be vulnerable in the days ahead as price approaches downtrend support- look for topside exhaustion ahead of 92.28 on recoveries IF price is indeed heading lower with the next leg down exposing Fibonacci support near the 90-handle. Ultimately a breach above the 2011 trendline would be needed to suggest a false break scenario here.

USD Forecast
USD Forecast
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Key US Data Releases

Key US Data Releases - USD Economic Calendar - Dollar Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

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