Technical outlook:
The US dollar index rose through the 109.21 fresh swing highs on Monday before reversing sharply lower. The index is seen to be trading close to the 108.00-10 area at this point in writing and is expected to drop to 104.30 in the next few trading sessions. The bears are still inclined to hold prices below the 109.21 interim resistance, to keep the near-term structure intact.
The US dollar index has been rallying since January 2021 and managed to carve a meaningful upswing between 89.50 and 109.21 respectively. The upper border needs to be retraced and the price could drop at least towards 101.00 which is the Fibonacci 0.382 retracement as seen on the daily chart. A break below 104.30 is required to confirm that the bears are back in control for a while.
Also, note that the US dollar index has produced a bearish divergence on the RSI as prices have rallied through 109.21 recently. This could be seen as a potential bearish reversal point as the bears are getting ready to hold the upper hand on the market. Furthermore, the daily chart has carved a pinbar candlestick pattern indicating a potential bearish reversal against 109.21.
Trading plan:
Potential reversal towards 104.30 against 109.21.
Good luck!
