US Dollar Technical Forecast: USD October Battle Lines Set- DXY Levels

2022-10-09 09:00:00

Michael Boutros,

US Dollar Technical Price Outlook: DXY Weekly Trade Levels

US Dollar technical trade level update – Weekly Chart
USD looking to validate completion of corrective pullback into October open
DXY weekly support 109.64, 108.09/74 – Resistance 112.94, 114.78, 115.29

Top Trading Opportunities in this Quarter

Recommended by Michael Boutros

Get Your Free Top Trading Opportunities Forecast

Get My Guide

The US Dollar Index closed well-off the weekly lows with the DXY squeezing out a gain of 0.29% on the heels of Friday’s NFP rally. The question remains on whether or not the correction off uptrend resistance is complete and while the broader outlook remains constructive, a deeper test of uptrend support cannot be ruled out. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly 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 Weekly

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

Notes: In my last US Dollar Weekly Price Outlook I warned that the DXY rally was, “threatening exhaustion into uptrend resistance at multi-year highs into the close of the month / quarter. While the broader outlook remains weighted to the topside, the advance may be vulnerable near-term. From a trading standpoint, losses should be limited to 109.64 IF price is heading higher on this stretch with a topside breach exposing resistance objectives towards 115 and beyond.” The index plunged more than 4.1% off the highs in the following days with Dollar registering a low at 110.05 this week before rebounding into the close. Its decision time- was that the exhaustion pullback, or is there a deeper setback on the cards before broader trend resumption?

Initial weekly support rests with the September low-week reversal close at 109.64 backed by the highlighted technical confluence at 108.0/74- a region defined by the 2001 low and the 23.36% Fibonacci retracement of the 2021 advance. A break / weekly close below this threshold would be needed to suggest a more significant high was registered last month. A weekly close above the September 2001 low-week close at 112.94 is needed to keep the immediate advance viable towards subsequent resistance objectives at the channel line, the 88.6% retracement of the 2001 decline at 115.29 and the highlighted trendline confluence near ~116.20s.

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

Bottom line: A US Dollar reversal off uptrend resistance has rebounded just ahead of initial support- we’re looking for / to validate a low in the days ahead. While the broader outlook remains constructive, the risk remains for a deeper correction before resumption of the broader trend. From a trading standpoint, the focus is higher while above 108 with a breach / close above channel resistance needed to fuel the next leg in price. I’ll publish an updated US Dollar Short-term Price Outlook once we get further clarity on the near-term DXY technical trade levels.