DXY PRICE CHART

Chart prepared by Michael Boutros, created with TradingView.

One of the most significant technical reactions this past year was in the US Dollar Index. For years now we’ve been tracking the 2011 support trendline, with parallels of this slope defining every major turn in the Dollar since the 2014 breakout.

A test of the upper parallel / 2016 high-close at 102.99 during the height of the COVID-19 crisis in March was followed by a massive yearly opening-range reversal, with the July break below the 2018 parallel fueling a decline to multi-year lows in August.

The 2011 trendline held for three months before crashing lower in November. This breakdown constitutes the first major break for the multi-year, up-sloping Dollar support. Initial support is eyed at the 88.6% retracement of the 2018 advance at 89.93, backed by the 2010 high at 88.70, and the 50% retracement / 2018 low at 88.18/25.

Resistance stands at 92.28, backed by former slope support – ultimately, a breach above the March low at 94.65 would be needed to suggest a more significant low is in place. Bottom line, the risk is weighted to the downside heading into the start of the year, but we’ll be on the lookout for a possible low in the second / third quarter that is closer to slope support.