Today I’m going to share my US Dollar Index (DXY) targets following today’s breakdown.
We’ll discuss where to watch for dollar shorts next week, a few key targets for November, and what would invalidate today’s breakdown.
Watch the video below and scroll down for the annotated charts and analysis.
The DXY is in freefall today after weak economic figures out of the US.
It was a miss across the board with today’s non-farm payroll, causing the dollar to break the key 105.60 support level.
Today’s breakdown could change everything as we head into the final two months of the year.
For the last three months, it’s been a bullish dollar story, one that I’ve covered at length since July.
But as I said throughout October’s consolidation, a sustained break below 105.60 would turn the dollar bearish.
Barring a miracle, the DXY is set to close well below that mark this week.
That could fuel markets like EURUSD and GBPUSD much higher through December.
A look at the broader DXY chart shows one possible target at 104.30.
That’s the late May and early June swing high, and a level that served as resistance in late August and early September.
A 104.30 DXY would likely put the EURUSD at 1.0840.
The euro could see higher than that following today’s dollar breakdown, but 1.0840 promises to be a significant resistance for EURUSD.
Of course, all of the above hinges on the DXY staying below 105.60 next week and the EURUSD holding above 1.0690.
Any higher time frame DXY close back above 105.60 next week would signal a bullish move for the dollar.
The same goes for EURUSD and a close back below 1.0690.
But, for now, the dollar has broken down on the daily and weekly time frames.