Technical Analysis

Long-term Levels Could Soon Bring Volatility

USD technical outlook

  • US dollar The index (DXY) is almost the lowest of the year, the lowest in 2018
  • The support zone dates back to the 2008 crisis

US dollar technical outlook: long-term levels could soon bring volatility

The price of the US dollar index (DXY) trades close to the lowest level in 2021 and not far above the lowest level in 2018. The current proximity of the support dates back to the volatile days of the GFC in 2008. Whenever the market trades around long-term levels, there is a risk of large price fluctuations.

Given the importance of support, it seems likely that we will soon be able to take a big step forward. The low of 2021 is 89.20, which is not very far from the current level, and below it the lowest level of 2018 is 88.25.

The previous levels of 2008-2010 at this intersection would have been completely exceeded and thus DXY would have grown at a negative pace. Parallel support is possible from the peak times of 2016/2020, but this has not yet been proven.

But before you think about the extended negative move, support is support as long as it is not. The risk of a collision is high, as the market has been low against the dollar for some time and for the most part.

Looking at short-term price support, the downward trend has remained intact since the last day of March. At the height of Q1 there is a trend line resistance, the importance of which is growing, where it now connects along three points.

DXY has rocked back and forth for the last few sessions, one or the other party is ready to give. The downside is that the recent slumps have developed in the lower day of February.

In the case of a permanent violation of 89.65, the lowest value of the year of 89.20 is quickly in focus. That’s when things can get interesting and we want to pay close attention to how pricing operations behave.

On the upper side, the first resistance level is a trend line from the highest in March and the recent high of 90.28. Exceeding these thresholds is necessary to bring at least the dollar to a higher level.

If we want to see a rally, an explosion higher is preferred, because it would be a sign that the market is stuck. A low stroke, even if it is over an obstacle, can only indicate a corrective collision.

Currently, the near-term outlook is neutral to the downward trend, but gender traders need to remain sharp here as the risk of increased volatility increases.

US Dollar Index (DXY) Monthly Chart (close to high levels)

dxy monthly schedule

US Dollar Index (DXY) Daily Chart (Short Range Destined to Break)

dxy daily schedule

DXY charts by TradingView

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—Wrote by market analyst Paul Robinson

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