Dollar Technical Forecast: USD Ripper Relaxes into October- DXY Levels

US Dollar Technical Price Outlook: DXY Weekly Trade Levels

• US Dollar technical trade level update – Weekly Chart
• USD ripper stalls into uptrend resistance- risk for near-term exhaustion
• DXY weekly support 111.10s, 110.39, 109.64 – Resistance 112.94, 114.18, 115.29

The US Dollar Index surged nearly 6.6% off the September lows with DXY stretching to multi-yearly highs this week. An outside-day reversal off uptrend resistance yesterday may be signaling the threat for topside exhaustion here and while the broader outlook remains constructive, immediate advance may be vulnerable in the day ahead. These are the updated technical targets and invalidation levels that matter on the US Dollar Index weekly price chart heading into the October / Q4 open. Review my latest Strategy Webinar for an in-depth breakdown of this DXY technical setup and more.

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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 we warned that DXY was approaching uptrend resistance and that losses should be limited by 108.09 IF price was indeed heading higher. “A topside breach / close above would likely fuel another accelerated rally with such a scenario exposing subsequent resistance objectives at 111.31 and the September 2001 low-week close at 112.94.” The rally faltered into channel resistance (blue) early in the month before pulling back with price briefly registering an intraday low at 107.68 on September 13th. The subsequent rally / breakout extended well-past 113 but has since faltered with price now threatening exhaustion into the close of the month / quarter- watch the weekly close here.

Initial weekly support now rests back at former slope resistance (currently ~111.10s) backed closely by the 61.8% retracement of the September range at 110.39 and the low-week reversal close at 109.64. Broader bullish invalidation now raised to the 2001 low at 108.09. A breach / weekly close above the yearly high-close at 114.18 is needed to mark resumption towards the 88.6% retracement of the 2001 decline at 115.29 and the highlighted trendline confluence near ~116.20s.

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Bottom line: The US Dollar rally is 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. Stay nimble heading into the close of the week with key US inflation data on Friday likely to fuel added volatility here. I’ll publish an updated US Dollar Short-term Price Outlook once we get further clarity on the near-term DXY technical trade levels.

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex