USD Technical Outlook:Bullish
- US Dollar Index (DXY) looking negative in the days ahead
- Looking for a pullback towards the June highs
US Dollar Technical Forecast: At a Temporary Tipping Point
The US Dollar Index (DXY) reversed on Friday, and despite a generally bullish NFP report the dollar quickly retraced gains it made following the release and continued in-line with the overnight reversal. The trend appears exhausted at this juncture, and on that a pullback looks to be in order.
The first area of support clocks in at the June high of 105.81. Beneath there lies a trend-line from May that could be the next stopping point should the June high be unable to hold. Would-be longs may want to look to these levels for potential entries.
As for shorts, despite a near-term bearish outlook, playing the retracement may be tricky, as the DXY may instead of decline decide to correct the upward move with sideways price action. A consolidation in place of a retracement could set up a base for another leg higher.
All-in-all, the outlook is for lower levels, sideways at best. If we see a bit more strength it may prove transient as the dollar appears exhausted. More broadly speaking the dollar is still in a strong uptrend and any weakness that materializes will likely be viewed as a dip-buying opportunity.
US Dollar (DXY) Daily Chart
US Dollar Index (DXY) Chart by TradingView
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX