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USD Weakness, US Dollar Index and USDJPY outlook

The USD Index (DXY) has recently met resistance at the 9500.00 area which forms a large zone of control and has been rejected three times this year. Price has been pushed down to 9400.00 and a drop below this area can see support at 9350.00 or 9312.60 tested. A loss around these levels could put further pressure on price and a confirmed loss of 9300.00 can lead to a move down to 9142.20, with 9231.40 light support along the way. Below these levels 9080.00 is an area of interest with buyers potentially stepping in, down to 9000.00. Further support can be seen at 8896.35 and 8793.40.

Resistance can be seen around 9500.00 as mentioned earlier with a break out above 9523.00 targeting a move higher to test the 9621.40 area. A back test around 9550.00 can lead to even higher prices as buyers gain confidence and short positions are squeezed. A move up 9700.00 can see sellers take positions and the market become overextended. This is why there is a higher probability of a retracement lower first.

The USDJPY pair is consolidating after its breakout above 111.40 and seems comfortable to trade around 112.35 for the moment. There is a building up of energy happening here at present as the market ignores geopolitical headlines and takes a breath. The push higher in indices and a move to risk on sentiment as earnings role in has helped the pair. Resistance can be seen at the recent high around 112.820 and a break above here targets 113.00 and 113.28 followed by 113.60.

Support for the pair can be seen around the 112.00 area but here is also a trend line rising at 112.24. A loss of this area could lead to a push down to 114.00 and a back test of the breakout. This would still leave a bullish outlook in play for the pair. A break under 111.00 and the higher low at 110.76 would place price firmly back in the consolidation zone centred on 110.00 with a floor at 109.37. Firm support can be seen at 108.12 ahead of 108.00.

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