US Dollar Technical Forecast | DXY Weekly Outlook

The US Dollar has extended its late-December rebound for a third consecutive week, recovering nearly 1.8% from the Christmas Eve low. This advance has now carried DXY into a key Fibonacci retracement zone, where upside momentum is being tested. Price action from here will be important in determining whether this rebound develops into a more durable base or stalls into consolidation.

Technical Outlook

The recent rally has retraced a meaningful portion of the November decline, with DXY closing the week near the 61.8% retracement at 98.38. This zone represents an initial resistance area and raises the risk of a near-term reaction. A sustained weekly close above this level would strengthen the case for continuation and suggest that a more significant low may be forming.

Above current levels, the next major technical hurdle sits at the 100.16 to 100.42 confluence zone. This region carries elevated technical weight, defined by the 2024 swing low, August high, November high-week close, and the 2024 low-week close. A larger reaction should be expected if price reaches this area.

On the downside, initial weekly support is located at the yearly open near 98.24. Trendline support extending from the 2025 lows converges around this level, keeping the near-term bias tilted modestly higher while price holds above it. A decisive break and weekly close below 97.65 would be required to signal resumption of the broader downtrend, with further downside risk toward 96.99 and the 2025 swing low near 96.22.

DXY Weekly Chart

Key Levels

Resistance:99.38 ,100.16 to 100.42, 101.55

Support:98.24, 97.65 to 97.80, 96.98

Bottom Line

The US Dollar rebound is now testing initial resistance, placing focus on how price reacts in the week ahead. If the recovery is set to extend, pullbacks should remain limited above 98.24, with a weekly close above 99.38 needed to fuel the next leg higher. Failure to hold support would shift focus back toward the broader bearish structure.

From a macro perspective, attention turns to the World Economic Forum in Davos next week, with President Trump scheduled to speak midweek. Markets will also closely watch the upcoming PCE inflation report, the Fed’s preferred inflation gauge. Following the stronger CPI print, the data will be key in shaping expectations around the timing of the Fed’s first rate cut, currently priced for June.

With US markets closed Monday for Martin Luther King Jr. Day, liquidity conditions may be uneven early in the week. Weekly closes around current levels should offer the clearest guidance on the next directional move.