US Dollar Technical Analysis: Trend, Support Keep Outlook Bullish for Now
USD Technical Outlook
- US Dollar Index (DXY) continues to hold onto shelf of support
- This bodes well within the context of an uptrend
The US Dollar Index (DXY) hasn’t gone anywhere over the past couple of weeks, but overall the technical outlook is bullish. We may continue to see some chopping sideways in the days ahead, but as long as confluent support holds then so does a generally positive outlook.
Support arrives via a slope crossing over from November. The last high inflection point as resistance was the Feb 24 ‘invasion day’ spike-high (97.73). Important event induced highs/lows take on an extra level of importance. In confluence with the slope is a minor level from 2020.
There have been two recent tests of support, and thus far the DXY is passing. Support is also holding within the context of an uptrend, which coupled together creates the higher likelihood that we will see it continue to hold.
From here a wedge or some other form of consolidation pattern could form before seeing a trend resurgence. When/if we see the DXY reassert itself, then the next target beyond the 99.42 high is the trend-line running down from 2001. It currently lies near 101. There is another minor level from 2020 that is in confluence.
This would be a big target to achieve and with the trend-line so long-term it would certainly be an enormous test for the dollar. We will discuss further should it become relevant.
On the flip-side, if we see a daily close below 97.71, then look for the DXY to at least correct a bit further. It might not be an outright reversal of trend, but there could be a decent-sized drop as the next line of support doesn’t arrive until the May 2021 trend-line.
For now, continuing to respect support as support within the context of an uptrend. Hold it and the outlook neutral to bullish, break it then then we will need to switch gears.
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.