US Dollar Outlook: DXY Plunges into Technical Support Ahead of FOMC
US Dollar Technical Price Outlook: DXY Near-term Trade Levels for FOMC
- US Dollar updated technical trade levels – Daily & Intraday Charts
- USD correction testing monthly open support ahead Fed interest rate decision
- Support at 92.35, 92 (key) - Resistance 92.77, bearish invalidation 92.90
The US Dollar Index plunged more than 0.55% into the start of the week with DXY now testing support at the objective July open with the Federal Reserve interest rate decision on tap tomorrow. While the threat of a larger correction remains, the focus is on possible inflection here over the next 48 hours and the battle lines are drawn for the Dollar heading into FOMC. These are the updated technical targets and invalidation levels that matter on the US Dollar price chart heading into the close of the week. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.
US Dollar Index Price Chart – DXY Daily
Technical Outlook: In last month’s US Dollar Price Outlook we noted that the DXY rally looked vulnerable as the post- FOMC breakout approached, “ the 92-handle – losses should be limited by the median-line IF price is indeed heading higher with a topside breach likely to fuel another accelerated run.” The index rallied to a high at 92.40 before pulling back nearly 1% with price rebounding just ahead of the median-line into the close of June. The greenback rallied more than 1.8% off that low before marking an outside-day reversal off uptrend resistance (on building divergence) last week – the threat remains for a larger correction while below the July high-day close at 92.77. Monthly open support rests at 92.34 backed by the monthly lows / the median-line around the 92-handle- an area of interest for possible price inflection IF reached.
US Dollar Index Price Chart – DXY 120min
Notes: A closer look at DXY price action shows the index probing trading within a proposed descending pitchfork formation with the median-line further highlighting confluent support here at the 100% extension / July open at 92.34/35. Look for a reaction here today; a break lower keeps the focus on the monthly low / close low at 92.00/09 backed by the September low /the 38.2% Fibonacci retracement of the May rally at 91.75/78. Initial resistance at 92.77 with near-term bearish invalidation lowered to the weekly open at 92.90.
Bottom line: The US Dollar pullback is testing confluent support here just ahead of tomorrow’ FOMC interest rate decision. From at trading standpoint a good zone to reduce short-exposure / lower protective stops – rallies should be capped by the weekly open IF price is still heading lower. Ultimately a larger correction may offer more favorable opportunities closer to uptrend support with a breach above the yearly high-day close / November 2020 high-day close at 93.23/40 needed to mark resumption of the broader uptrend. Review my latest US Dollar Weekly Price Outlook for an in-depth look at the longer-term DXY technical trade levels.
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.