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US Dollar Technical Outlook: DXY, Channel in Focus

US Dollar Technical Outlook: DXY, Channel in Focus

Paul Robinson, Strategist

USD Technical Outlook

  • DXY has lost steam, but maintaining upward channel structure for now
  • A breaking of the lower parallel is seen as warranting a bearish outlook
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US Dollar Technical Outlook: DXY, Channel in Focus

The US Dollar Index (DXY) has been without momentum the past few weeks, but still working its way higher. It managed to sneak above the September trend-line, but is falling short of the yearly high. The structure in focus right now is most easily seen on the 4-hr time-frame.

The upward grind has created a neat-looking channel that can be used as a guide. Stay within and the bias is neutral to bullish, with the next targeted level on the top-side set at the yearly high of 93.43. But that is looking increasingly unlikely to be seen given the way price is starting to roll over.

Should the lower parallel of the pattern fail the focus will be on the downside. This would be consistent with the trend in place since the March 2020 spike high. A break of the channel will have the area around 92 and 91.50 targeted as the next levels of support. The latter level is not too far away from the 200-day MA at 91.35.

Tomorrow is the FOMC announcement on rates. While rates are expected to remain where they are, future signaling by the Fed could be a near-term maker or breaker of this channel formation.

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US Dollar Index (DXY) 4-hr Chart

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US Dollar Index (DXY) Daily Chart

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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.