Technical outlook:
The US dollar index dropped through the 105.86 lows on Friday before finding some support. The index has pulled back since then and is seen to be trading close to 106.75 at this point in time as the bulls prepare for a comeback soon. Also, note that the index hit its downside targets around 108.00 and 106.95, calling for a meaningful pullback at least.
The US dollar index might have terminated its larger-degree corrective drop, which began from the 114.67 highs earlier. The entire structure unfolded as a combination of three waves, hence correcting towards the 105.86 mark. A high probability remains for a bullish turn from current levels and a climb through fresh highs above 114.67.
The recent downswing is between 110.60 and 105.86 as seen on the 4H chart here. Immediate resistance is marked at 110.60 and a break higher would confirm that the trend has reversed. On the flip side, a bearish turn from the 109.00 mark would indicate that prices have resumed lower again to print below 105.86.
Trading idea:
Downside target hit. Potential rally towards 110.60 against 105.00
Good luck!
