**U.S. Dollar Technical Analysis: Greenback’s Rally Stalls at Key Resistance**
*By Matt Weller, FOREX.com. Adapted and expanded for educational purposes.*
The U.S. dollar’s recent bullish momentum has slowed after encountering a significant technical roadblock. Following several sessions of upside traction, the greenback has failed to push through key resistance levels against a basket of major currencies. Technical patterns suggest further volatility may loom ahead, especially as traders digest vital economic reports and reassess the Federal Reserve’s next moves.
This analysis expands on the original breakdown by Matt Weller for FOREX.com, combining insights from chart patterns, technical indicators, and recent macroeconomic trends affecting USD performance.
## Current State of the U.S. Dollar
After a modest rebound earlier this week, the U.S. Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, has stalled near its recent peak. This pause comes as investors await more data to gauge the strength of the U.S. economy and the Federal Reserve’s policy path.
– As of the latest data, the DXY hovers near the 102.50 mark, after failing to break above near-term resistance levels just above 103.00.
– Recent price action shows multiple rejections at that level, indicating strong selling pressure and possibly a forming top in the short term.
– The cautious tone among forex market participants suggests a wait-and-see approach, especially ahead of upcoming inflation and labor market reports.
## Technical Breakdown of the U.S. Dollar Index (DXY)
The DXY’s chart reveals a textbook case of resistance rejection, highlighting the interplay of moving averages, Fibonacci levels, and prior supply zones.
### Key Resistance Zones:
– The most immediate and critical resistance lies near 103.00, a zone the DXY tested multiple times in recent sessions without success.
– This level also aligns with the broader descending trendline drawn from the late 2022 highs, reinforcing its technical significance.
– Fibonacci retracement levels from the July high to the recent low show the 61.8% retracement near 103.15, adding another layer of resistance.
### Support Areas to Monitor:
– On the downside, minor support exists around 102.00, with more substantial support levels near:
– 101.60 (former breakout zone)
– 101.00 (psychological and technical floor, aligning with 50% Fibonacci retracement)
### Chart Indicators:
– The Relative Strength Index (RSI) on the daily timeframe shows a bearish divergence, where prices made higher highs while RSI failed to follow through, indicating a loss of momentum.
– The 50-day Moving Average currently trends flat, suggesting trend indecision.
– The MACD histogram is starting to tick lower, signaling a potential shift in momentum.
## U.S. Dollar vs. Major Currency Pairs
### EUR/USD: Retests Support After Bounce
– The EUR/USD pair continues to trade between 1.0950 and 1.1100, oscillating within a defined trading range.
– The dollar strength earlier this week contributed to a retracement towards 1.0950 support.
– RSI and MACD indicators suggest neutral momentum, with short-term direction likely to be driven by economic data surprises.
Key levels:
– Resistance: 1.1040, then 1.1100
– Support: 1.0950, then 1.0880
### GBP/USD: Pound Shows Resilience
– The British pound has resisted further downside, with the GBP/USD pair sticking close to 1.2700.
– Strong wage data in the UK has underpinned sterling strength, helping hold back USD gains.
– Technical resistance remains firm around 1.2800, while support sits near 1.2600.
Key levels:
– Resistance: 1.2780, then 1.2850
– Support: 1.266
Read more on USD/CAD trading.