Sellers Take Maintain of Steering Wheel

US DOLLAR TECHNICAL OUTLOOK:

• The U.S. greenback, as measured by the DXY index, fell through the first three months of the yr, with costs at present difficult a serious technical assist zone
• Heading into the second quarter, the danger of a breakdown has elevated
• Obtain our full quarterly US greenback forecast for a extra complete view of the outlook

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The U.S. greenback, as measured by the DXY index, was on a curler coaster journey through the first three months of the yr. Early in February, the index fell under the 101.00 and hit its weakest mark in about 10 months, however then managed to recuperate quickly, reaching its finest degree since November 2022 in a reprieve that proved to be short-lived. The tug of warfare between bulls and bears was voracious, with the latter group ultimately prevailing.

Confluence Resistance Halts Bulls

The February-March rally stalled at confluence resistance, only a contact under the psychological 106.00 deal with. On this zone, the 38.2% Fibonacci retracement of the September 2022/February 2023 droop converges with a medium-term descending trendline that has been guiding the buck’s decline for the previous six months.

After failing to clear the 106.00 technical ceiling, the U.S. greenback index pivoted decrease as upside momentum vanished as rapidly because it appeared, permitting bears to regain decisive management of the market. With draw back strain accelerating in late March, costs have dropped to a key assist across the 102.00 degree, which corresponds to the Fibonacci retracement of the January 2021/September 2022 advance.

Breakdown on the Horizon

On the time of writing, DXY continues to commerce above the 102.00 deal with, however a breakdown appears within the offing. Ought to this state of affairs play out, sellers might launch an assault on February’s low at 100.82. Beneath that, the following flooring rests at 99.00, the 68.2% Fib retracement of the 2021/2022 transfer mentioned earlier than. On additional weak point, subsequent technical helps are seen at 97.60 and 94.70.

Within the occasion of a bullish reversal, which at this level appears unlikely given the rising detrimental sentiment across the buck, costs want to beat resistance starting from 104.00 to 104.65 to make certain that the medium-term downward correction is totally over. If the 104.00/104.65 space is taken out, upside impetus might choose up tempo, paving the way in which for a rally towards 106.17, adopted by 107.85.

US Greenback (DXY) Chart – Weekly Timeframe

Supply: TradingView, Ready by Diego Colman

This text focuses solely on the U.S. greenback outlook from a technical evaluation standpoint. If you need to be taught extra in regards to the elementary forecast for the U.S. foreign money, click on the hyperlink under to obtain DailyFX’s full and full USD quarterly information. It is free!