US Dollar Technical Outlook At Resistance! DXY!The US Dollar fell to a four-month low last week with prices testing 94.50 support on dovish FOMC meeting. But prices managed to reverse their losses with the Dollar Index posting steady gains, for the most part, this week. Prices rallied for nearly four consecutive days after falling to the 94.50 support.
The gains in the US Dollar came about as various Fed members’ speaking engagements saw most of the FOMC members coming out hawkish on interest rates, with some expecting to see a rate hike as early as April. Unlikely as it may be, the Fed speak this week showcases the view that the broader consensus is continuing to incline to more rate hikes. Economic data this week from the US saw a mixed bag with durable goods orders released yesterday falling while housing data continued to remain mixed. Today’s GDP data is unlikely to see much traction with expectations broadly for an unchanged print at 1.0%. Even if the GDP data is revised lower, with the FOMC event done with, it is unlikely to see much movement on the markets.
The week ahead will be exciting as March concludes and the markets gear up for the NFP data next week. Between now and then, the US Dollar is very likely to remain below the 96.5 – 96.0 resistance and 94.50 – 94.0 support.
US Dollar Technical Outlook
The weekly chart shows prices currently trading within last week’s range of high and low following the brief rejection of prices near 94.50 – 94.0 on the weekly basis. There is a high likelihood that this week’s price action could close with an inside bar, which is likely to signal a breakout. To the upside, resistance at 96.5 on the weekly is a level to watch, which if gives way could see the US Dollar rally back to the old resistance near 98.0. To the downside, with the support level coinciding with last week’s low, the 94.5 – 94.0 support will be necessary as a break below this level will see prices fall to 93.0 – 92.5.
US Dollar Index – Weekly Chart likely to form an inside bar
On the daily chart, price action is currently on the resistance level of 96.5 – 96.5. A bearish confirmation here could see prices start to decline but trade within the ranges specified. Further price action evolvement will be based on a break of one of the two levels, but there is a possibility for another leg to the downside to test the lower support at 94.0, testing 14th and 15th September lows.
The 4-hour chart has signaled a reversal with prices forming a doji and a subsequent break to the downside near the 96.5 – 96.0 resistance. This should most likely see the US Dollar continue to push lower, but as with the daily chart, only a break of the lower support or the resistance above will confirm further direction in the US Dollar Index.
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