US Dollar Short-term Outlook: USD Defends Support at Fresh Yearly Low

US Dollar Index Technical Outlook: USD Short-term Trade Levels

US Dollar attempts to snap three-week losing streak- defends major trend support
USD monthly / weekly opening-ranges intact- Core PCE tomorrow, NFPs next week
Resistance 101.23/41, 101.73/77 (key), 102.62- Support 100.21 (key), 99.96, 99.59

The US Dollar Index defended major trend support at the yearly lows yesterday with DXY attempting to snap a three-week losing streak. The focus remains on a breakout of the monthly opening-range with the broader short-bias still vulnerable while above the weekly low. Battles lines drawn on the DXY short-term technical charts heading into the monthly cross.

US Dollar Index Price Chart – USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Technical Outlook: In my last USD Short-term Outlook, we noted that DXY had, “rebounded off confluent downtrend support and threatens a larger bear-market correction in the days ahead. The immediate focus is on a breakout of the weekly / monthly opening-ranges for guidance.” It’s been more than two-weeks and the September range remains intact despite an attempted break lower on Tuesday.

Note that pitchfork support has continued to govern the downside here and this range remains a crucial slope-pivot for the Dollar. The immediate focus is on a breakout of the weekly opening-range for guidance with the short-bias vulnerable while above this slope.

US Dollar Index Price Chart – USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Notes: A closer look at USD price action shows the index trading within an embedded descending pitchfork with the index straddling the median-line for the past two-weeks. Initial resistance is eyed at the objective weekly high / 2024 yearly open at 101.23/41 and is backed by the September-open / high-close (HC) at 101.73/77. Ultimately a breach above the upper parallel just higher would be needed to invalidate the June downtrend / suggest a more significant low was registered yesterday.

Support now rests with the monthly low at 100.21- a break / close below this slope would likely fuel a bout of accelerated losses for the greenback with initial objectives eyed at the 2023 low-day close (LDC) at 99.96 and that yearly low at 99.59- look for a larger reaction there IF reached. The next major Fibonacci consideration is eyed at the 61.8% retracement of the 2021 advance at 98.98.

Bottom line: The US Dollar Index has been trading into downtrend support for over a month now and the focus remains on a breakout of the September range for guidance. While a reversal candle off slope support yesterday does threaten a larger near-term recovery here, the broader technical outlook remains weighted to the downside while below the monthly-open. Form a trading standpoint, rallies should be limited to 101.77 IF price is heading lower with a close below 100.21 needed to fuel the next major move.

Note that we get the release of key US inflation data tomorrow with the August Core Personal Consumption Expenditure (PCE) on tap. Watch the weekly close here for guidance and stay nimble into the monthly cross- the next major event risk is slated for Friday with Non-Farm Payrolls next week likely to fuel further volatility here.

Key US Economic Data Releases

Active Short-term Technical Charts

Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.