USD Technical Analysis: DXY Gunning for New Cycle Highs

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USD TECHNICAL OUTLOOK

• US Dollar Index (DXY) is gunning to create a long-term trend
• Watch the short-term price action, could have big-picture ramifications

 

USD TECHNICAL ANALYSIS: DXY GUNNING FOR NEW CYCLE HIGHS

The US Dollar Index (DXY) is working on trading to new cycle highs, and to do so it will need to climb above the May high at 105. A sustained breakout above this level that eventually leads to a monthly closing print above it could have major long-term ramifications.

The range over the past few years appears at serious risk of breaking given the macro landscape has shifted so dramatically in the past couple of years. With ‘all that is going on’ it doesn’t seem likely that the dollar will continue to trade within the same range for much longer.

With that in mind, the May reversal candle we looked at on Friday looks at risk of getting negated as soon as this month. But perhaps not, maybe we see the DXY reverse here shortly around 105 and continue to keep the broader breakout at bay. For now.

This is a macro view with respect to the dollar taking off out of its range, so it could take more time to develop. But again it seems very likely at some point it will make the move.

In the short-term the 105 level will be in focus. A near-term reversal around the level could put longs at risk and give shorts the upper hand even if the general tides are rolling in favor of the dollar. A daily close above 105 doesn’t necessarily imply that longs will maintain the upper hand, however.

A breakout and reverse after becoming extended is still a risk. Trading around major levels like this can get a little tricky, and on that taking a wait-and-see approach may be prudent for the more conservative until we have a little better clarity on how the DXY wants to treat this potentially significant rejection/breakout on a monthly basis.

US DOLLAR INDEX (DXY) MONTHLY CHART

US DOLLAR INDEX (DXY) DAILY CHART

DXY Charts by TradingView

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---Written by Paul Robinson, Market Analyst. 13th June 2022 | DailyFX

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DXY Dollar Index Rock Solid Amid Market Mayhem Ahead of the Fed, BoE and BoJ

Jun 14, 2022 | DailyFX
Daniel McCarthy, Strategist

US DOLLAR, USD, DXY INDEX, FED, BOE, BOJ, TREASURIES - TALKING POINTS

• The US dollar has held recent gains as the market awaits the Fed
• APAC equities are lower but not all risk assets suffered today
• All eyes on central bank meeting ahead.

The US Dollar made a 20-year high as markets are still recalibrating in the aftermath of last Friday’s mind-blowing US CPI number.

Some risk assets had some reprieve today with the Aussie, Kiwi and Sterling the notable gainers as markets take a breather ahead of what is shaping up to be a hectic week with many central banks’ meetings.

Wednesday – Federal Reserve
Thursday - Bank of England
Friday – Bank of Japan

US DOLLAR (DXY) INDEX TECHNICAL ANALYSIS

The DXY has eclipsed last month’s peak to make a fresh 20-year high today. The next historical high that may offer resistance is at 109.77 from September 2002.

Momentum appears to be bullish with positive gradients on all short, medium and long-term simple moving averages (SMA)

Making this high saw the price move outside the upper band of 21-day SMA based Bollinger Band.A close back inside the band could indicate a potential reversal.

Support might be at 10- and 21-day SMAs, currently at 103.15 and 102.72 respectively.

Chart created in TradingView

 

Will USD resume its uptrend?