U.S. Dollar Sell-Off Targets Initial Support

DXY Daily Chart

U.S. Dollar Sell-off Targets Initial Support

U.S. Dollar Sell-off Targets Initial Support

DXY Price Chart - Daily Timeframe

Technical Outlook: We’ve been tracking a long-term slope line dating back to 2011 and in last week’s Technical Outlook, we highlighted the risk for a pullback while below this key threshold. The subsequent decline is now testing initial support at the 94-handle where basic channel support converges on the broader 23.6% retracement of the yearly range. A break lower still has to contend with the 100-day moving average / median-line (blue) at ~93.60s – a close below this region is needed to suggest that a more significant high is in place.

DXY 240min Chart

(Click on image to enlarge)

DXY Price Chart - 240min Timeframe

Notes: A closer look at price action further highlights this near-term support zone around the figure. Resistance stands with the November open / weekly opening-range high at 94.63 with a breach above the ascending median-line (red) needed to shift the focus back to the long-side in the index.

Bottom line: The index is testing initial support and while we could see some immediate relief here, the focus remains lower while within this near-term descending pitchfork formation (blue). Keep in mind that we have the release of the U.S. Consumer Price Index (CPI) tomorrow with the event likely to spark increased volatility in the USD crosses.

Relevant Data Releases

(Click on image to enlarge)

U.S. Economic Calendar

Disclosure: DailyFX, the free news and research website of leading forex and CFD broker FXCM, delivers up-to-date analysis of the ...

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