The US Dollar Index (DXY) is currently experiencing an upward trajectory as it extends its rally that began in September, moving closer to significant resistance levels near monthly highs. As the market approaches these pivotal points, observers note that the risk of exhaustion or potential price inflection is present, with both weekly and monthly opening ranges becoming critical indicators for traders.
The key resistance levels for DXY are identified at 98.68 to 98.94, with additional thresholds at 99.39 and 99.85. On the support side, vital levels are positioned at 97.95 and 97.71 to 97.76, alongside lower levels at 97.01 and 97.13. The forthcoming reaction at these resistance levels is poised to play a crucial role in determining the near-term direction of the dollar. A successful break above these levels could signal the beginning of a new upward movement, while a failure to sustain gains might lead to a deeper pullback for the currency.
As potential delays in key economic data due to a government shutdown loom, price action is likely to dictate market trends as October approaches. The trading environment appears to be finely balanced, with significant implications for the USD’s short-term outlook.
Taking stock of recent technical movements, the DXY’s performance has been notable since it briefly touched an intraday low of 96.22, following an earlier assessment which indicated a potential for inflection at the July/annual low of 96.38. This low marked a key turning point, from which the index has since rebounded over 2.4%. The focus now intensifies as the advance nears the pivotal resistance that characterizes this month.
On a technical chart analysis, the DXY is currently operating within an ascending pitchfork formation that extends from the year’s low. The weekly opening range is developing just below the median line of this formation. The convergence of the resistance at 98.68 to 98.94 is particularly important, as it is anchored by several significant technical indicators, including the 61.8% retracement levels from August’s movements. For a more bullish outlook, a decisive breach above this region is necessary, with subsequent objectives located at the 78.6% retracement at 99.39 and the 100% extension at 99.85. A more substantial trend reversal would require the index to breach levels around 100.15.
Conversely, the support established at 97.95 is further bolstered by the 38.2% retracement level, with failures to hold above 97.71 risking the invalidation of the near-term uptrend. Lower support levels of 97.01 and 97.13 act as critical safety nets against further market downturns.
In conclusion, the current recovery of the US Dollar is critically positioned as it nears important resistance levels, shaping the October trading landscape. Traders are advised to maintain flexibility and closely monitor developments, particularly regarding the ongoing government shutdown, which may introduce volatility into the market. The upcoming weekly opening range will serve as a guiding signal for further trading actions, with a daily close above 98.94 seen as necessary to trigger the next significant phase of the dollar’s advance.
