Technical outlook:
The US dollar index rallied through 105.40 on Wednesday before pulling back lower. The index is seen to be trading close to 105.00 at this point in writing as the bears prepare to come back in control. Also, note that the recent rally took out a meaningful resistance at 105.35 as marked on the 4H chart here. A pullback looks imminent now.
The US dollar index has carved a meaningful larger-degree bearish boundary between 114.70 and 100.50. The above boundary is being retraced and the potential remains towards at least 106.50 in the near term. Besides, note that the bulls might be targeting above 109.30 in the next few weeks since it is the Fibonacci 0.618 retracement of the earlier drop.
The US dollar index is expected to produce a counter-trend drop through 103.00 and down to 102.50 in the near term. The larger-degree corrective rally is then expected to resume higher towards 106.00 and 109.30 levels respectively. Ideally, prices should stay above the 100.50 lows to keep the medium-term bullish structure intact.
Trading idea:
A potential short-term drop towards 103.00, then higher again.
Good luck!
