USD Technical Outlook
- US Dollar Index (DXY) struggles to climb above 2017 high
- Short-term outlook at risk of USD decline
US Dollar Technical Analysis: DXY remains stuck at neutral
The US Dollar Index (DXY) is struggling to hold above the 2017 high at 103.82, after trying to stay above the previous three days, and today could be a fourth failure . The last two full sessions have seen minor reversals around the level.
If today’s reversal holds, this could be the final test before we see the DXY trade-off and at least work out a broader, or downright correct, consolidation pattern. This has been an extremely strong and persistent trend, but even the strongest trends are experiencing corrections.
If the DXY is to continue to trade higher, a short-term consolidation could do it good. On the downside, the first level to watch will be last week’s low at 102.35. Holding this level on a daily closing basis could help set up a high-level consolidation pattern that could give it the foundation it needs to clear the 2017 levels.
However, if the price action turns aggressive on the downside and this low is removed, look for a correction to bring the price back towards the 101/100 level. Not the strongest level of support, so we would need strong sponsorship there to firm up the outlook.
On the other hand, if the DXY can close above 103.82, expect the trend to continue, with no substantial resistance to speak of to prevent it from running much further. The next major top isn’t until the 2001 high above 121. That’s pretty far out, so it probably wouldn’t be something we need to worry about anytime soon.
For now, let’s focus on the 2017 high and whether we will see a consolidation or correction scenario unfold. The short-term outlook seems to be tilting in favor of shorts.
US Dollar Index (DXY) Daily Chart
DXY Chart by TradingView
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX