USD Technical Outlook
- US Greenback Index (DXY) broke near-term downward channel
- March trend-line, September low may come into play quickly
- A take a look at of resistance may mark vital take a look at of the downtrend
DXY has room to commerce larger into resistance take a look at
The US Greenback Index (DXY) is in bounce mode with some room to run earlier than an vital take a look at of resistance takes form. That is growing throughout the context of a medium-term downtrend following a flip from help, which makes it significantly fascinating to see how such a take a look at could play out.
What’s giving the transfer extra respiration room is the breaking of a downward sloping channel (most simply seen on the 4-hr) chart. Conversely, as checked out within the weekly Euro technical forecast, EUR/USD (57% of the DXY weighting) is falling out of a rising channel.
One other issue serving to bolster the bullish case now’s the truth that the highest of a help zone was tagged final week, which led to a weekly reversal candle. The zone dates to the 2009 excessive that grew to become resistance in 2019 and help in 2018. Will this flip larger mark a significant low because it had three years in the past?
That’s arduous to say now, however maybe if that’s the be the case there shall be a extra thorough testing of help that drags out a number of weeks to some months. However a rally from right here to the September 1 low at 91.74 and trend-line from March would qualify as countertrend take a look at that would assist present extra readability on the broader development.
On the sentiment entrance, a weaker USD has turn out to be a prevalent theme amongst market individuals, so from a contrarian standpoint the established order could also be overdue for a testing if not outright reversal.
Beneficial by Paul Robinson
Try the Q1 USD Forecast
US Greenback Index (DXY) Weekly Chart (turning from help in the direction of resistance)
DXY 4-hr Chart (broke downward channel)
DXY Charts by TradingView
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—Written by Paul Robinson, Market Analyst
You’ll be able to comply with Paul on Twitter at @PaulRobinsonFX