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US Dollar Technical Analysis: DXY Outlook in Limbo

US Dollar Technical Analysis: DXY Outlook in Limbo

Paul Robinson, Strategist

USD Technical Outlook

  • US Dollar Index (DXY) trying to reclaim the upward trend
  • Support and resistance in play that will help shape outlook

US Dollar Technical Analysis: DXY Outlook in Limbo

The US Dollar Index (DXY) is currently bouncing from around a level that began as important back in March 2020. The low (94.67) during the initial days of the pandemic has been in play on two occasions since, with the most recent occurrence coming around the October high.

The question right now is whether short-term strength is a bounce or the beginning of a resumption of the uptrend from the May low. The trend-line from that low was recently broken, but current strength is pushing price back above. A full recapture of broken trend support could have the upward trend resume, however, confidence is still low on that scenario.

At the moment the DXY is finding difficulty in climbing above resistance via the range that developed from late November until last week. This could create a short-term ceiling around 95.55 even if the index is to continue pushing onward.

As you can see, based on trend direction and levels there is a bit of crosswinds to contend with that make getting any conviction difficult. The low (94.62) from last week at the March 2020 level makes for an interesting spot of support given it is also below the trend-line from May.

A break below that level would be seen as a materially bearish event. A hold of the level for now really only suggests the bias is neutral at this juncture, not necessarily bullish. Will wait for further developments before drawing any concrete conclusions.

US Dollar Index (DXY) Daily Chart

dxy daily chart

DXY Chart by TradingView

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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.

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