Technical outlook:
The US dollar index slipped to 103.94 in the early hours of the Asian session on Tuesday. The index is seen to be trading at around 104.10 at this point in writing and is expected to continue its decline through 102.30 at least in the near term. Also, note that bears have finally managed to carve an Evening Star candlestick pattern on the daily chart.
The US dollar index could be preparing to drop through initial support around 102.30 as bears are now looking to remain in control. The bottom line remains that prices should stay below the 104.88 mark to keep the structure intact. The high probability remains for a meaningful top in place and prices to drag below 102.30 and 99.65 in the near term.
Besides, note that the daily RSI has been producing a strong bearish divergence as shown here. This is a potential indicator for a trend reversal soon. A break below initial support at 102.30 will confirm the same. Until that happens, the US dollar index remains poised to reach a new high towards the 105.00-50 mark.
Trading plan:
Potential drop through 102.30, 99.65 and 97.65 against 105.50
Good luck!
