USD technical outlook
- DXY retreat deepens and highlights a vulnerable trend
- The trend line support is put to the test
US Dollar Technical Outlook: DXY Outlook Limbos
The US dollar index (DXY) continues to withdraw after the new year’s level reached by the middle of the month. But is it just a retreat or the beginning of a wider decline? It is still difficult to say at the moment.
There has certainly been volatility since the lowest trend in May, and at the current level, DXY is not in a better position than it was two months ago, but that does not mean that we do not see a higher level. A trend line test is currently being developed, but the trend line is not the most secure given its limited connection points.
If it breaks, it will not be a significant development. However, the deeper the decline continues, the more likely it is that we will see a greater reversal and not a remedial move. USD leading to new annual records.
Pricing leaves the outlook confusing, one cannot rely on conviction. At this point, it seems wise to be cautious until we have more pricing. If we soon see a sharp turn higher, it can make a ball to put the buyers back on the court.
On the other hand, a continuing slide could set a counter-trend step for potential sellers to take advantage of the additional weakness.
Daily chart of the US dollar index (DXY)
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– Written by market analyst Paul Robinson
You can follow Paul on Twitter at @PaulRobinsonFX