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US Dollar Technical Outlook: USD Rips as War Erupts in Europe

US Dollar Technical Outlook: USD Rips as War Erupts in Europe

Michael Boutros, Strategist

US Dollar Technical Price Outlook: DXY Near-term Trade Levels

  • US Dollartechnical updated technical trade levels – Daily & Intraday Charts
  • USD soars to fresh yearly highs as risk-off flows fuel rallies in USD, Gold
  • Critical resistance at 97.71/91 – Constructive while above monthly open at 96.70
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The US Dollar Index surged more than 3.2% off the yearly low with Russia’s invasion into Ukraine today fueling risk aversion in global equity markets. The DXY has ripped fresh yearly high with the immediate advance now approaching a critical technical confluence- we’re on the lookout for possible inflection off this zone in the days ahead with the broader outlook constructive while above the February open. These are the updated technical targets and invalidation levels that matter on the US Dollar Index price chart. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.

US Dollar Index Price Chart – DXY Daily

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

Chart Prepared by Michael Boutros, Technical Strategist; US Dollar Index on Tradingview

Technical Outlook: The US Dollar Index ripped through key resistance levels with DXY up more than 2.5% off the February opening-range lows. The rally has taken out the yearly rang highs on this stretch with the index now eyeing a critical resistance pivot at 97.71/91- a region defined by the 2018 high, the 61.8% retracement of the 2020 decline, the 61.8% retracement of the broader 2017 decline and the 100% extension of the advance off the January low. Suffice to say, this is a significant barrier and we’re looking for possible inflection into this threshold.

US Dollar Index Price Chart – DXY 240min

US Dollar Index Price Chart - DXY 240min - USD Trade Outlook - Dollar Technical Forecast

Notes: A closer look at DXY price action shows the extent of today’s breakout in more detail with the breach above the objective monthly open / median-line triggering a massive runup towards the aforementioned resistance zone. Initial support now rests back at 96.70 with near-term bullish invalidation raised to the weekly-open at 96.10. A topside breach from here would likely unleash another accelerated rally with subsequent resistance objectives eyed at the March 2020 swing low at 98.27, the April 2020 swing low at 98.81 and the 99-handle.

Bottom line: A massive bout of risk aversion has fueled a breakout in the US Dollar with the Index now approaching a long-term key technical pivot zone that could interrupt the advance. From a trading standpoint, a good region to reduce portions of long-exposure / raise protective stops on a stretch towards 97.71/91- look for a reaction there with a daily close above needed to sustain the immediate advance. Losses should be limited to the monthly open IF price is indeed heading higher.

Note that the Fed’s preferred inflationary read is on tap tomorrow with consensus estimates calling for the Core Personal Consumption Expenditure (PCE) to print at 5.1% - the highest level since 1983. Be aware of the geopolitical headlines out of Europe as the deteriorating conflict between Ukraine and Russia could continue to fuel haven flows into the greenback. Buckle-up! The next 24-hours will be critical for the Dollar into the weekly close- stay nimble here. Review my latest US Dollar Weekly Price Outlook for an in-depth look at the longer-term DXY technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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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.

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