USD Q2 2021 Technical Forecast

USD Q2 2021 Technical Forecast

Source: TradingView; Prepared by James Stanley

US Dollar Pullback Pushes Toward Resistance Barriers

At this point, the US Dollar is testing above the 23.6% retracement of last year’s bearish move. But, this also highlights the relative size of this bullish theme in comparison to last year’s sell-off.

And, as noted above, the fact that higher rates being driven by optimism may create a risk-off scenario is somewhat of a highlight of where we are: In a market that may have difficulty holding up without the support of Central Banks, especially the Fed.

At this point, the bullish push does appear to be a corrective move in the bigger-picture theme of weakness in the US Dollar. On the weekly chart below, resistance potential around the 94-94.47 area is noted, and a bit-higher is another confluent zone around the 96.00 handle. As for support – the visible area around the two-year-lows, right around the 90.00 psychological level looms ominously below current price action.

Dollar Index (DXY) – Weekly Timeframe (Late 2017- March 2021)

USD Q2 2021 Technical Forecast

Source: TradingView; Prepared by James Stanley

Q2 2021 Forecast For The US Dollar: Bearish

The quarterly technical forecast will remain bearish for the US Dollar, driven by the assumption that the Q1 bullish push was a counter-trend pullback in a longer-term bearish theme for the Greenback.

On a larger scale, the level at 95.89, mentioned above, is key for long-term trend diagnostics. This is the 50% marker of the 2001-2007 major move. This price also set a quick spot of support in June and July during the USD’s momentous sell-off last year, but hasn’t returned to the picture since. If buyers are able to pose a sustainable break above this price, then the sell-off can be seen as nullified and, likely, we’ll be dealing with some very different scenarios of higher rates and/or risk aversion across global markets.

Dollar Index (DXY) – Monthly Timeframe (Late1999 – March 2021)

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