Technical outlook:
The US dollar index dropped the through 109.00 low on Tuesday, before finding interim support. The index has managed to climb to 109.50 at this point in writing as the bulls might be looking to come back in control pushing prices towards 111.35. Even if prices drop to fresh lows below 109.00 from here, that would be a shallow move.
The US dollar index could be within its last drop towards 107.00 and 105.00 going forward. After hitting the backside of its support-turned-resistance trend line at 112.66, prices have dropped through 109.00 carving a meaningful bearish boundary. Interim support is just around 109.00, followed by 107.50; while resistance is seen at 112.65 followed by 113.65 respectively.
The US dollar index could be preparing to rally towards 111.30 (adjusted), before finding resistance again and turning lower towards 107.00 and 105.00 levels respectively. A break above 110.25 will confirm and accelerate prices further to the Fibonacci 0.618 retracement of the above drop (111.30). A high probability remains for a turn lower thereafter.
Trading idea:
Potential drop towards 107.00 against 113.65
Good luck!
