US Dollar Forecast Holds A Break, But Follow Through Depends on Direction 2021-07-17 23:00:00 John Kicklighter, Chief Strategist US Dollar Technical Forecast Talking Points: The DXY Dollar Index has worked its way into the smallest two-week trading range since February 2020 A technical break seems inevitable, but momentum after the clearance is more dependent on market conditions than direction or the spark A path of least resistance break for the Dollar would benefit a range like EURUSD’s while the assumptions of a bullish Dollar charge in a GBPUSD reversal Technical Forecast for US Dollar: Bearish The US Dollar is primed for a technical break. Such a scenario naturally draws a lot of excitement, but identifying such scenarios is the least important factor of an effort to trade around such a scenario. Direction of course is also critical, but criteria for determining a break can help account for that factor. Far more difficult in the equation is the potential for follow through. Market conditions that dictate the general tempo of the broader financial system go much further along these lines, but they can be difficult to evaluate for many as they are not usually inherent to a singular asset. With seasonality expectations matching low volume and open interest more broadly across the markets, we are swimming in conditions in which it is likely difficult to establish a trend. That weighs on my evaluation of what comes next. For staging, the DXY Dollar Index is showing the hallmarks of an impending break. The range the benchmark has carved over the 10 trading days through Friday’s close is the smallest as a percentage of spot since February 2020.