Technical outlook:
The US dollar index is testing its recent swing highs registered around the 104.06 mark. The index is seen to be trading close to 104.00 at this point in writing and is expected to turn lower soon. It is quite possible for bulls to push through a shallow high above 104.06 before giving in to bears. Upside remains limited from here though.
The US dollar index remains well supported around 102.30 in the near term. A minor break below 102.30 initial support will confirm that a top is in place and bears are back in control. A further break below 99.66 and 97.65 would add further confidence to the bearish setup. On the flip side, a push through 104.00 will open the door to test 104.50 and 105.00 respectively.
Also note that the US dollar index price rise has clearly diverged with the RSI on 4H chart here. The above bearish divergence is also a potential trend reversal indicator against the 104.50 mark. Traders might be preparing to initiate short positions from current levels sooner than later. Watch out for a break below 102.30 for acceleration.
Trading plan:
Potential drop through 102.30 and 99.65 against 104.50-105.00 mark.
Good luck!
