US Dollar Short-term Outlook: USD Coils Between Key Levels – Breakout Looms
By Michael Boutros, Sr. Technical Strategist
Date: 18/02/2026
Summary
The US Dollar Index (DXY) is currently experiencing a defined monthly range after a decline from recent highs. The index has seen a 1.5% drop from its February peak, yet remains within the uptrend established in late January. The market is poised for a potential breakout from this consolidation phase, which could dictate the next directional move for the dollar.
Current Technical Analysis
As of now, the DXY is attempting to validate a break from a multi-week downtrend, with the monthly opening range preserved. Key resistance levels are identified at 97.88/97, 98.24, and 98.55/68, while support levels are at 96.88/90, 96.48/65, and 95.61/81. The recent pullback has kept the index within the late-January uptrend, and the next significant move will depend on whether the recovery can gain traction or if selling pressure will reassert itself.
Market Events and Economic Data
Key economic events are on the horizon, including the release of the Federal Reserve minutes and Core PCE data, along with the preliminary Q4 GDP figures expected to show a growth rate of 3%. This data is particularly significant given the context of the longest US government shutdown in history, which lasted 43 days.
Technical Levels and Outlook
The DXY has rebounded from support at the 61.8% retracement level and is currently trading at the objective monthly open. The focus remains on the near-term recovery, with a breakout anticipated as the month closes. A break below 96.48 would threaten the downtrend, while a breach above 97.88/97 could signal the next leg of an upward advance. The analysis suggests that losses should be limited to 96.88 if the price is heading higher, with a close above 97.97 needed to fuel a significant upward movement.
Conclusion
The US Dollar index is at a critical juncture, attempting to break out of the January downtrend. Traders should remain vigilant as the market awaits key economic data releases that could influence the dollar's trajectory. The upcoming week will be crucial for determining whether the dollar can extend its recovery or if it will face renewed selling pressure.