Technical outlook:
The US dollar index dropped through the 110.00 intraday low on Monday after reversing sharply from the 112.60 high last Friday. The index is seen to be trading close to 110.15 at this point in writing, looking to pull back towards the 111.60-70 area in the near term. The bears have also managed to take out immediate support at 110.00, hence a pullback remains a high probability.
Earlier, the index had reversed from the back side of its support-turned-resistance trend line from around 112.65. It has now produced a meaningful bearish boundary to be worked upon, before turning lower again. Ideally, the bears will be now targeting the 107.00 mark which is the next-in-line support as seen on the chart here.
The US dollar index is expected to produce a pullback rally towards the 111.40-60 zone in the next few trading sessions before hitting resistance again. Also, note that the Fibonacci 0.618 retracement of the above drop is also seen close to 111.50. The bears will be gearing up to come back in control if prices manage to reach 111.50 in the near term.
Trading idea:
Potential drop through 107.00 against 113.65
Good luck!
