Technical outlook:
The US dollar index has been drifting sideways since the last two trading sessions just after hitting fresh swing highs around 104.06. It might have carved a meaningful top as bears are looking poised to drag prices below 102.30, which is initial support. Ideally, prices should stay below 104.06 to keep the structure intact.
The US dollar index has been in the stunning uptrend since the 89.20 lows registered on January 06, 2021. The index has already surpassed its fibonacci extensions past 100.00 as highlighted on the chart. The last leg has already extended and is now producing a bearish divergence on the daily RSI, which indicates a potential trend reversal.
The US dollar index is now seen to be trading around 103.70 and it is expected to break below 102.30 in the near term. It would then be confirmed that bears are back in control and are here to stay. Aggressive traders might be willing to initiate fresh short positions with risk above 105.00 mark.
Trading plan:
Potential drop to 102.30 and 99.65 against 105.00
Good luck!
