Technical outlook:
The US dollar index continues to defy resistance and prints yet another swing high around 101.83 during the European session on Tuesday. The index remains in control of the bulls since January 2022 when a higher low was carved around 94.60 levels. The entire rally looks complete and a reversal seems to be due anytime soon.
The US dollar index remains vulnerable to a bearish reversal as yet again the new swing high is accompanied by a bearish divergence on daily RSI (not shown today). It is not confirmed yet but there is a strong potential indication of a bearish reversal ahead. Immediate price support is now seen through the 99.60 mark as the bears prepare to break lower.
Once below 99.60, the US dollar index would have taken the first step of a larger bearish reversal. Going forward bears would drag prices below 97.60 and 94.60 levels respectively. Today could be marked as a Doji (indecisive) candlestick pattern on the daily chart. Traders might wait aside for a confirmed bearish signal before initiating fresh short positions.
Trading plan:
Preparing for a potential drop to 99.60 at least.
Good luck!
