Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

US dollar price outlook: DXY - FOMC game plan

The dollar is taking a respite after a three-week sell-off crashed through multi-year support. We take a look at the levels that matter on the DXY chart heading into FOMC.

Us dollar price Source: Bloomberg

US dollar talking points

  • US dollar recovery vulnerable heading into Federal Open Market Committee (FOMC) - risk is lower sub-98.87
  • FOMC interest rate decision on tap next week- exhaustion risk

Greenback looks to snap losing streak

The US dollar is attempting to snap a three-week losing streak with the index up just 0.36% mid-week. However, the recovery is likely to be short lived as the broader risk is still weighted to the downside after breaking below multi-year slope support on Friday. These are the updated targets and invalidation levels that matter on the DXY weekly price chart heading into FOMC on Wednesday.

Find out more about forex trading from IG

US dollar price chart Source: TradingView
US dollar price chart Source: TradingView

The US Dollar Index tested major uptrend resistance into the start of October trade before making an about-face with the subsequent decline taking out multi-year trendline support last week. We’re looking for topside exhaustion on this recovery with initial resistance eyed at 97.87, as key resistance stands with the 61.8% retracement of the October high-week close at 98.70.

The first major support hurdle is eyed around 96.80, a level where the 61.8% retracement of the yearly range converges on basic trendline support. Keep an eye out for a bigger reaction there if that level is reached. A break below this threshold is needed to validate a larger reversal in the greenback with such a scenario targeting the yearly open at 96.14 and the yearly low-week close at 95.66.

US dollar: the bottom line

A three-week sell-off in the US Dollar Index has broken multi-year uptrend support so we are on the lookout for topside exhaustion with the FOMC interest rate decision on tap next week. From a trading standpoint, we are looking to fade a high below 98.87 with a break below 96.80 needed to show a more significant correction is underway in the currency. Ultimately, a close above 99.43 would be needed to signify a resumption of the broader uptrend.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps
Find out more

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off
Log in now

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform
Log in now

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Take advantage

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.