Needs to Climb Resistance to Continue Friday’s Move



USD Technical OutlookUS Dollar Index (DXY) explosion on Friday could set up for higher pricesStrong resistance needs to be overcome to further a bullish biasUS Dollar Technical Analysis: Needs to Climb Resistance to Continue Friday’s MoveThe US Dollar Index (DXY) exploded on Friday to a nine day high all in a single session, making it the strongest single day rally since early March. Given it is coming out of a low from support and not after an extended move, there is reason to believe this may only be the beginning.But strong resistance will need to be overcome first. To start the week the DXY is struggling around the 91.40 level. This level was resistance briefly in early March, then turned into support on a couple of occasions soon after breaking through, before again turning into resistance during the latter part of last month.A daily close above resistance is ultimately needed, but a 4-hr close during the day would be enough to spark interest for early entries on longs. How high the index may rise is difficult to say, but given the sudden burst higher against the trend the market may be caught flat-footed and help drive price higher in an aggressive manner as market participants quickly adjust to changing conditions.Taking it one step at a time we will want to see how price action behaves at each step of the way. The first hurdle to overcome should the 91.40 level get captured, will be the 200-day moving average falling down just under 92 at this time. There is a trend-line running lower off the March 2020 spike-high, but isn’t the sturdiest line yet given it only meets the bare requirements of a trend-line.Before getting ahead of ourselves, the DXY still needs to take out resistance, and then from there it appears would-be longs can get more aggressive. We might see it break and run or we may see a break and pullback retest before running. On this end the latter scenario is ideal as it would offer the opportunity to see resistance act as support and potentially provide a solid risk/reward entry.For would-be shorts, the 91.40 line is seen as a line-in-the-sand and for those looking for further dollar weakness it appears to be a decent risk/reward level to lean on.US Dollar Index (DXY) Daily Chart (bursting off Jan trend-line)US Dollar Index (DXY) 4-hr Chart (needs to cross strong resistance to continue higher)DXY Chart by TradingViewResources for Forex TradersWhether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.—Written by Paul Robinson, Market AnalystYou can follow Paul on Twitter at @PaulRobinsonFX
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