US Dollar Technical Analysis: Recent Reaction at Support Bodes Well for DXY
USD Technical Outlook
- US Dollar Index (DXY) pullback held onto old resistance as new support
- The sharp push off support is bullish, may get sideways price action near-term
US Dollar Technical Analysis: Outlook Neutral to Bullish
Last week the US Dollar Index (DXY) declined into a an area of old resistance that was viewed as becoming a potential source of support. To recap from last week’s USD piece, the area around 97.80 made up a pair of minor horizontal lines from 2020 and more importantly a top-side slope created over the last couple of months.
Seeing a breakout and then emphatic test and pass of old resistance as support creates a strong floor for DXY. The broader tone and trend are higher for the dollar, but in the near-term we may see some sideways price action.
As long as the above mentioned support holds on a daily closing basis, then the trading bias is bullish, neutral at worst. It will require a strong drop through that support level to flip the script towards a bearish bias.
Looking higher, the 2001-present trend-line remains the big focal point. The connecting point for this line is the early pandemic days in 2020, so it has an important inflection point which adds to the weight of the trend-line.
It currently sits over 100 near 101, but is a moving target. There is a minor swing high from those early pandemic days that is in confluence with the trend-line.
Tactically speaking, if long from lower levels (i.e. support test), then it may be a good idea to sit tight with a move below 97.71 acting as a stopping point. For those looking to enter, a dip back towards support or a couple of few days of base-building may offer up a good risk/reward entry. Shorts at this time hold no appeal given trend and support in play.
US Dollar Index (DXY) Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX