US Dollar Short-term Outlook: USD Trump Bump Extends into Resistance

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

US Dollar post-election rally extends more than 2.7% monthly low
USD testing key pivot zone near yearly highs- risk for exhaustion / price inflection
Resistance 106.10/37 (key), 107.00/17, 108- Support 105.63, 104.87/97 (key), ~103.87/89

The US Dollar Index ripped to into resistance near the yearly highs this week with the Trump rally now testing a major pivot zone. While the broader outlook remains constructive, the immediate advance may be vulnerable here and the focus is on possible inflection off this zone in the coming days. Battles lines drawn on the DXY short-term technical charts.

US Dollar Index Price Chart – USD Daily

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

Technical Outlook: In last month’s USD Short-term Outlook, we noted that DXY had, “responded to uptrend resistance and threatens a larger pullback within the broader October advance. From a trading standpoint, losses would need to be limited to the median-line (103.42/49) IF price is heading higher on this stretch with a close above 104.87 needed to mark uptrend resumption.”

The index fell more than 1.1% into the monthly cross with USD registering an intraday low at 103.37 before reversing sharply higher on the heels of the US election. The Dollar has now rallied nearly 2.5% since the Trump victory with price testing confluent resistance this week at 106.10/37- a region defined by the 2023 high-week close (HWC) and the 2024 high-day close (HDC). Looking for possible price inflection off this zone with the immediate long-bias vulnerable while below.

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 the confines of an ascending channel with the upper parallel further highlighting key near-term resistance here at 106.10/37. Initial support rests with the May HDC at 105.63 backed by the 104.87/97- a region defined by the July HWC, the objective weekly open, and the February swing high. A break / close below this threshold would suggest a more significant near-term high is in place. Ultimately, a break below the 200-day moving average / 38.2% retracement near 103.87/89 is needed to invalidate the October uptrend / threaten a larger trend reversal.

A topside breach / close above this key pivot zone is needed to fuel the next leg of the advance with subsequent resistance objectives eyed at the 2023 HWC / 2024 HDC at 107.00/17 and the 108-handle- both areas of interest for exhaustion / price inflection IF reached.

Bottom line: The US Dollar breakout has extended into the first major resistance hurdle here and while the broader outlook remains constructive, the immediate advance may be vulnerable below this threshold. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 104.87 IF price is heading for another breakout with a close above 106.37 needed to fuel the next leg of the advance. Review my latest US Dollar Weekly Forecast for a look at the longer-term DXY technical trade levels.

Key US Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Short-term Technical Charts

Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.