USD Technical Analysis: DXY Looks Ready for Stab at New Lows, EUR New Highs
USD Technical Outlook
- US Dollar Index (DXY) entrenched in a downtrend
- Corrective rally looks over, ready to take a stab at new lows
USD rolling over in-line with the trend
The U.S. Dollar Index (DXY) made an attempt to rally from January into the early part of this month, but was always at risk of it only amounting to a corrective rally within the context of a pervasive downtrend. Recent price action is confirming that notion and a decline to new cycle lows could soon be in order.
A break through 90.05 will have the 89.20 low in focus. The broader target in mind is the 2018 low at 88.25. It’s a big level given it amounts to the bottom of a range dating to 2015. Perhaps it becomes another macro low, perhaps the dollar weakness theme grows legs.
Before worrying about what will happen at that juncture, the general trading bias is to the downside for now. For the bias to flip bullish there is a good amount of work required. For starters, a turnaround back above the June trend-line will be needed, then the September low at 91.74.
If the DXY is headed to new cycle lows then EUR/USD is likely headed for a new cycle high, given it is 57% of the index’s weighting. Support clocks in at 12023 and 11952; resistance at 12189 and then the cycle high at 12349.
US Dollar Index (DXY) Daily Chart (trading bias is negative)
EUR/USD Daily Chart (curling to the upside)
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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.