US Dollar Technical Forecast: At a Temporary Tipping Point

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

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading 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