US Dollar Short-term Outlook: USD Pressures Support—Breakdown Risk Builds 5 8 2026

USD is trading just above a key support zone as downside pressure builds. A break here could accelerate the decline.

Written by

Michael Boutros

Sr. Technical Strategist

Fri, 08 May 2026, 04:51 PM

DXY fades early-month rally- Index trading just above key support within broader downtrend
Index is now pressing near-term support zone that has defined recent lows- major Fibonacci support rests just below
A break below support would signal resumption of the broader decline while stabilization here could spark another recovery within the broader structure
Event risk next week with CPI 7 PPI on tap
DXY Resistance 98.24, 98.53, 98.69/78 (key)- Support 97.88, 97.50 (key), 96.88

The US Dollar remains under pressure, with price action grinding lower into a support zone that has held the recent range together. The broader trend remains tilted to the downside, and the lack of meaningful recovery attempts underscores persistent selling pressure. With major Fibonacci support just below, this area takes on added significance, and a break could open the door for an acceleration in losses in the sessions ahead. Battle lines drawn on the USD short-term technical charts.

US Dollar Index Price Chart – USD Daily

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Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Technical Outlook: In last month’s US Dollar Short-term Outlook we noted that DXY was rebounding off support and that the, “risk rises for some recovery within the multi-week downtrend. From a trading standpoint, rallies should be limited to 98.69 IF price is heading lower on this stretch with a close below 97.88 needed to fuel the next leg of the decline.” The index rallied 1.5% off the monthly low in the following days and despite marking a single-day close at 98.97, the bulls were unable to sustain the break with DXY erasing the entire advance to trade just above support again into the close of the week. The focus is on the December low close at 97.88 with a daily close below needed to clear the way for a test of more meaningful technical support just lower.

US Dollar Index Price Chart – USD 240min

image-20260508124657-5

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView

Notes: A closer look at USD price action shows DXY continuing to trade within the confines of a descending pitchfork extending off the March highs. A rebound off the median-line failed at yearly open resistance near 98.24. Subsequent resistance is eyed just higher at the 200-day moving average near ~98.54 with broader bearish invalidation steady at 98.68/78- a region defined by the August high-day close (HDC), the 2025 May low, and the 38.2% retracement of the late-March decline. A break / daily close above this threshold is needed to suggest a more significant low is in place and a larger trend reversal is underway.

A break lower from here exposes key support at the 61.8% retracement of the yearly range at 97.50. Note that the median-line converges on his threshold into the start of the week and losses below this slope would threaten another bout of declines of the Greenback. Subsequent support rests with the yearly low-week close (LWC) at 96.88 and the 2025 low-close at 96.65. Both levels of interest for possible downside exhaustion / price exhaustion IF reached.

Bottom line: The US Dollar index is trading into pivotal resistance with the May opening range taking shape just above. While the medium-term outlook remains weighted to the downside, the immediate decline may be vulnerable into major support just lower. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a drop towards the median-line - rallies would need to be limited to the 200-day moving average IF price is heading lower on this stretch with a close below 97.50 needed to fuel the next major leg for the decline.

Keep in mind we get the release of key inflation data next week with the April Consumer Price Index (CPI) and the Producer Price Index (PPI) on tap Tuesday & Wednesday, respectively. Watch the war headlines and keep an eye on the weekly closes here for guidance. Review my latest US Dollar Weekly Forecast for a closer look at the longer-term DXY technical trade levels.