Technical outlook:
The US dollar index dropped through 102.55 during the late New York session on Thursday before pulling back. The index has since drifted sideways within a contracting triangle (lower degree) and is now looking to drag below the 102.30 initial support. Bears are still looking poised to remain in control in the near term.
The US dollar index is supported around 102.30, followed by 99.65 and lower, while resistance is now in place just above the 104.88 mark. The index is expected to print lower lows and lower highs until prices stay below 104.88 going forward. A break below 102.30 would be seen as confirmation of a trend reversal ahead as bears tighten their grip.
The US dollar index had been producing a strong bearish divergence on the daily RSI since the last two swing highs around 10.80 and 104.88 respectively. The price action seems to be moving towards a potential trend reversal ahead as bears are eyeing 102.30. Potential downside targets are 99.65 and 97.65 levels going forward.
Trading plan:
Potential drop through 99.65 against 105.00
Good luck!
