US Dollar Technical Analysis: DXY Set Up for Weakness
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USD Technical Outlook
- US Dollar Index (DXY) having difficulties climbing above the 2017 high
- Near-term outlook at risk of a setback for the USD
US Dollar Technical Analysis: DXY Continues to Be Stuck in Neutral
The US Dollar Index (DXY) is having a difficult time maintaining above the 2017 high at 103.82, with it having attempted to stay above on three prior days, and today may be a fourth failure. The past two full sessions have seen minor reversals around the level.
If today’s reversal holds it could be the final test before we see the DXY trade off and at least work on a larger consolidation pattern, or outright correct. It’s been an extremely strong and persistent trend, but even the strongest of trends undergo corrections.
If the DXY is to keep on trading higher a short-term consolidation could do it some good. On the downside the first level to watch will be last week’s low at 102.35. Maintaining that level on a daily closing basis could help put in a high-level consolidation pattern that may give it the base it needs to clear the 2017 levels.
However, if price action becomes aggressive on the downside and that low is taken out, then look for a correction to take price back towards the 101/100 level. It’s not the strongest level of support so we would need to see some strong sponsorship around there to firm up the outlook.
On the flip-side, if the DXY can close above 103.82 then look for the trend to continue, with no substantial resistance to speak of stopping it from running much further. The next major high isn’t until the 2001 high over 121. That is quite a ways away so it wouldn’t be anything we would likely need to worry about any time soon.
For now, focusing on the 2017 high and whether we will see a consolidation or correction scenario unfold. The near-term outlook appears tilted in favor of shorts.
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.