DXY reaching a high resistance zone
Technical outlook in USD
- The US Dollar Index (DXY) is agitated around a resistance line from September
- The course of the price action here could shape both the short and medium term
US Dollar Technical Outlook: DXY Reaches Significant Resistance Zone
The US dollar has hovered around a resistance line, and the way things are going here could impact both the near and medium term outlook. Generally speaking, the downtrend is still intact from the March 2020 high, although it is losing shape with the recent higher low created in May (compared to the January low).
A push beyond the September line would put into play the possibility that a higher high (relative to the March high) would develop. This may be an important development given the higher trough mentioned above. The wind would turn upward.
On the other hand, if recent difficulties give way to selling then a higher could develop which would force DXY to trade in a range at best, if not start another larger leg lower. The first area of short-term support is 92.
From there, we would consider 91.51 and the 200-day drop as the next support levels. If there is material weakness, a trendline rising from the January low could be the underside of a wedge formation. Maybe it will take a few months to really develop.
The DXY is at an important crossroads with trendline resistance close at hand, so we should see a short term trading bias developing soon. The big picture is not so clear and it will take a little longer before we can get the conviction one way or another.
Daily chart of the US dollar index (DXY)
Resources for Forex Traders
Whether you are a beginner or an experienced trader, we have several resources available to help you; tracking indicator sentiment of the trader, quarterly business forecast, analytical and educational webinars held daily, trade guides to help you improve trading performance, and one specifically for those who are new to forex.
— Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX