**US Dollar Technical Forecast: Rebound Stalls at Resistance, Bearish Pressure Builds**
*Adapted and expanded from an original article by David Iusow at Forex.com*
The US Dollar (USD), after attempting a slight rebound earlier this week, faces strong technical and fundamental resistance across multiple major currency pairs. A widespread rejection at key technical levels has analysts and traders watching for signs of further weakness in the greenback. Despite some positive developments in the US economy, dollar bulls are losing momentum as pivotal resistance zones hold firm and bearish patterns take shape.
This comprehensive technical forecast examines the recent price action of the US Dollar Index (DXY) and analyzes the prospects for future direction against a basket of major currencies such as the Euro (EUR), Japanese Yen (JPY), and British Pound (GBP). Using a blend of technical chart patterns, Fibonacci retracement levels, moving averages, and momentum indicators, the near-term outlook for the USD appears skewed toward further downside, barring a significant shift in macroeconomic fundamentals or monetary policy expectations.
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### Overview: Dollar Index Faces Rejection at Key Resistance
The DXY, a weighted index tracking the USD’s performance against six major currencies, including the EUR, JPY, and GBP, has recently failed to sustain a rebound from monthly lows. After attempting to push higher in early August, the index was rejected near the 50-day moving average and a crucial Fibonacci retracement level.
Key takeaways:
– The DXY surged briefly to retest prior resistance near 105.00 but could not hold above this level.
– The rebound stalled at the 61.8% Fibonacci retracement level of the July-August decline.
– The bearish rejection implies continued structural weakness despite a temporary pause in selling pressure.
Unless DXY clears the 105.00–105.30 resistance zone with conviction, the outlook leans bearish. Fiscal and monetary uncertainty, coupled with slowing economic indicators, may continue to hamper the USD.
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### Technical Analysis: DXY Breakdown and Key Levels
The US Dollar Index continues to trade within a descending channel that began forming in mid-July. Price action has respected the boundaries of this channel, making lower highs and lower lows—a classic bearish trend pattern. Let us review the current technical picture in more detail.
**Chart Structure:**
– The DXY has been making consistently lower peaks, characteristic of a weakening uptrend.
– A rebound from the July low near 103.50 found resistance at both the upper bound of the descending channel and the 50-day Simple Moving Average (SMA).
– The failure to break out above the 61.8% Fibonacci retracement at 105.15 reinforces technical weakness.
**Key Resistance Levels:**
– 104.90–105.30: Previous support turned resistance; converges with 50-day SMA and the upper trendline of descending channel.
– 106.00: Round-figure psychological resistance and former multi-week support in May.
– 106.65: May swing high and objective on any bullish reversal.
**Key Support Levels:**
– 103.35–103.50: Recent swing low and channel support; inflection point for a deeper decline.
– 102.60: 78.6% Fibonacci retracement of April–July rally.
– 101.90: Yearly low printed in April; last line of defense for long-term bull trend.
Overall, unless the DXY breaks through 105.30 on a closing basis, the risk of a deeper drop toward 103.50 and beyond remains elevated.
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### Momentum Indicators Highlight Bearish Divergence
In addition to price action, technical indicators are confirming that momentum is fading on any bullish attempt.
**Momentum Tools Analysis:**
– Relative Strength Index (RSI): Failing to break above the 50 neutral zone, suggesting lack of bullish conviction.
– MACD: Stuck below the signal line and turning negative, indicating bearish crossover and
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